A new report from Morgan Stanley has revealed that if Ethereum switches to a proof-of-stake (PoS) consensus as planned, it will do away with the need for miners, reducing the demand for graphics processing units (GPUs), and significantly lower energy needs.
GPU usage may decrease if Ethereum switches from a proof-of-work method to a proof-of-stake one through the Merge of the Beacon Chain with the ETH mainnet.
Sheena Shah, an equity strategist at Morgan Stanley, says that the less energy-intensive proof-of-stake will result in a decline in the market for GPU miners. The report read:
“Bitcoin and Ethereum currently require powerful computers for the mining process and consume a lot of energy which governments and regulators are increasingly concerned over. If Ethereum moves to using Proof-of-Stake (PoS) it will eliminate the need for miners (reducing demand for GPUs) and drastically reduce energy requirements.”
The bank claimed that over the previous 18 months, crypto mining has significantly impacted the gaming graphics business, driving an expected 14% of revenue in 2021 while “significantly contributing to a major graphic shortage, which boosted overall mix and pricing.”
ETH/USD trades at $1,200. Source: TradingView
The report stated that although GPU demand might decrease, chip manufacturer Nvidia is less dependent on the demand for cryptocurrency mining than it was in 2017–19.
The bank also observed that in the first half of the year, demand for graphics cards from crypto mining, which contributed to the shortfall, started to decline. This was as a result of the market decline in cryptocurrencies.
However, it was predicted in a different analysis by Bloomberg in mid-June that Ethereum miners would likely continue mining until the Merge takes place later this year. Additionally, some miners thought about switching their Ethereum miners to mine Revencoin or Ethereum Classic.
Nvidia and AMD (AMD) have both maintained that they have reduced the likelihood of cryptocurrency-related downside scenarios, but Morgan Stanley believes that a decline in gaming GPU prices will occur in the first quarter of 2023. This will be caused by a number of reasons, including a decline in work-from-home activity, the migration of cryptocurrencies to point-of-sale systems, and “tough sequential comps after channel inventory rebuild in 2022,” according to the report.
The bank stated that since it is currently unprofitable for all of these computers to mine other cryptocurrencies after the Merge, Ethereum miners will likely sell their used GPU equipment. The bank also stated that since net ether (ETH) supply is anticipated to decline after the Merge and may even turn contractionary, it is unlikely that all of the miners will switch to staking.
The report also stated that switching to PoS will not address Ethereum’s scalability issues, including its poor transaction throughput or transaction costs.
Related reading | Ethereum Hashrate Plunges Over 10% As Mining Profitability Drops
Featured image from Pixabay, chart from TradingView.com
Telegram chatbot Unibot is grappling with the loss of approximately $640,000 worth of digital assets following an exploitation of a newly deployed contract by a hacker.
JixuDeputy Prime Minister Heng Swee Keat shared insights on AI's transformative potential at the Singapore Week of Innovation and Technology (SWITCH) 2023. Mr Heng highlighted AI's profound impact, stressing that it's a key element of deep technology (deep tech) that is reshaping the world.
JoyA nonprofit under McCaleb has acquired half a billion dollars worth of chips from Nvidia, and plans to lease out computing capacity to companies engaged in AI projects.
AlexTeams behind the Floki protocol and Bitget crypto exchange are embroiled in accusations of market manipulation following the listing and subsequent delisting of TokenFi (TOKEN), as reported in a social media post by the Floki team and a Bitget blog post on October 31.
JasperGary Gensler, the Chair of the U.S. Securities and Exchange Commission (SEC), took to Twitter on Halloween to deliver a unique birthday message to Bitcoin, as the cryptocurrency celebrated its 15th year since the release of its foundational white paper.
JasperCircle, a major stablecoin issuer, to discontinue private consumer accounts, directing attention to institutional and business services amid industry speculation.
Hui XinBackpack, a well-known NFT wallet app operating on the Solana blockchain, made a significant announcement regarding its forthcoming crypto exchange, the Backpack Exchange, earlier this week.
JixuAs Bitcoin nears its 21 million limit, its future relies on transaction fees, miner incentives, and the support of institutional investors and Bitcoin holders. It's an evolving and intricate path towards a fully mined network.
JasperChina is softening its stance on NFTs, with reports suggesting a notable shift in its approach after a year of stringent regulations on blockchain projects.
JixuA 20-year-old individual from Florida has been sentenced to 30 months in prison for his involvement in a cryptocurrency SIM swap scam that resulted in the theft of nearly $1 million.
Jasper