If Ethereum moves to proof-of-stake (PoS), as planned, it will remove the need for miners, slow demand for graphics processing units (GPUs) and dramatically reduce energy requirements, Morgan Stanley said in a report Monday.
Ethereum developers are hoping that the Merge will happen by September, and potentially as early as August, but given previous delays, it would not be surprising if this were pushed out to early next year, the report said.
Crypto mining has had a massive impact on the gaming graphics market in the past 18 months, the bank said, driving an estimated 14% of revenue in 2021, but at the same time “substantially contributing to a major graphic shortage which boosted overall mix and pricing.”
GPU demand should slow but Nvidia (NVDA) is less exposed to cryptocurrency mining demand than it was in 2017-19, the note said.
In addition, demand from crypto mining, which contributed to a shortage of graphics cards, started winding down in the first half of the year, the bank noted.
Both Nvidia and AMD (AMD) have argued that they have minimized the downside scenarios from crypto, but Morgan Stanley is of the view that there will be a correction lower in gaming GPU in the first quarter of next year. This will be due to a combination of factors including lower demand due to a reduction in working from home, cryptocurrency migration to PoS, and “tough sequential comps after channel inventory rebuild in 2022,” it added.
Ethereum miners will most likely sell their used GPU equipment after the Merge as it is currently not profitable for all these computers to mine other cryptocurrencies, the bank said, adding that net ether (ETH) supply is expected to fall after the Merge, and may even turn contractionary, so it is unlikely that all the miners become stakers.
Moving to PoS will not solve Ethereum’s scaling problems such as the number of transactions per second or result in lower transaction fees, the report added.
All writers’ opinions are their own and do not constitute financial advice in any way whatsoever. Nothing published by CoinDesk constitutes an investment recommendation, nor should any data or Content published by CoinDesk be relied upon for any investment activities. CoinDesk strongly recommends that you perform your own independent research and/or speak with a qualified investment professional before making any financial decisions.
Recommended Content
Editors’ Picks
Ripple's move above this key level could trigger nearly 50% rally for XRP
Ripple has overcome a critical resistance level and flipped into a support floor on the weekly time frame. This development happened while XRP tightly consolidated for roughly 250 days. Investors can expect XRP to kickstart a massive rally.
Optimism price outlook with nearly $90 million worth of OP tokens flooding markets on Friday
Optimism volatility has shrunk in the ours leading to the network’s cliff unlock. It joins the likes of dYdX and Sui, which have similar events on their calendars. As token unlocks are often considered bearish catalysts, investors should brace for a reaction after the event.
Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Retail watches from the sidelines with a bias for shorts
Bitcoin could clear $73,777 peak as BTC bulls resurface. Ethereum might fall 10% before next leg up as ETH RSI teases with sell signal. XRP could lose $0.6000 threshold as Ripple bulls fail to show up.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito price action shows a potential cup and handle formation. Based on theoretical measurement rules, a successful breakout could yield a 56% rally to $6.0. A breakdown of the $3.86 support level would create a lower low for JTO and invalidate the bullish thesis.
Bitcoin: BTC may have recovered, but is it out of the woods?
Bitcoin’s (BTC) upward momentum has shown a significant decline for the past two weeks or so. This development led to a bearish signal on the weekly and an uncertain outlook on the monthly.