Independent researcher Kyle McDonald predicts that bitcoin’s network could be “regulated away,” which would cause the price to plummet.
He suggests selling bitcoin right now. This is because the Ethereum blockchain will switch to a significantly less energy-intensive method for validating transactions. It’s called ” Proof-of-Stake”. Investors and regulators might realize that the more energy-intensive method Ethereum and Bitcoin use now, ” proof-of-work”, was never necessary.
Bitcoins large use of energy is a problem
McDonald’s spoke on CoinDesk TV’s “First Mover” program Friday. He cited the “climate crises” and Bitcoin’s large use of energy. McDonald said that Bitcoin doesn’t have the coordination as Ethereum to leave proof of work and could therefore be “the first to get regulated.
The issue of crypto’s energy consumption is a matter of contention for governments and environmental activists. McDonald’s claimed that bitcoin will never again see $69,000. Last November, the cryptocurrency traded at close to this mark.
The Ethereum switch, also known as ” the Merge,” will take place this month. One benefit is that fewer computers will be needed to maintain the blockchain.
McDonald’s said that the possibility of Ethereum reducing energy costs by 99.95% was “highly probable.”
McDonald’s stated that the shift from a system that generates random numbers at a high rate with 10 million graphic processing units across the globe to one that runs on just a few thousand computers, which is very low-energy, will make a big difference. Graphic processing units, or the Merge,” will take place this month. One benefit is that fewer computers will be needed to maintain the blockchain.
McDonald’s created the Ethereum Energy Movement Tracker to track Ethereum’s energy movements. It uses a bottom-up approach but does not factor in Ethereum’s prices or electricity price, according McDonald’s website.
He said, “I’m starting from the hashrate and then looking at the hardware. Then I will make a technical argument for the amount of electricity that must be used.”
McDonald’s stated that there is a risk with non-fungible tokens ( NFTs). This means that “there is a good possibility some miners will switch to proof of work temporarily after the Merge.”
NFTs and the ethereum merge
He said that if the miners switch, it could lead to duplicates of NFTs on another chain for a brief period. It could even “potentially dilute their values” if that happened.
OpenSea is the largest NFT marketplace in the world and stated that it will only support the proof-ofstake chain. It also said that it had been preparing for the transition to ensure the “process runs smoothly.”