Ethereum Merge May Have No Benefits: Morgan Stanley

Paigambar Mohan Raj
Source: The Coin Republic

A new report by Morgan Stanley, one of the largest financial institutions in the world, has addressed Ethereum’s (ETH) upcoming merge. The merge, which will see Ethereum move to a proof-of-stake model, will remove the need for miners. As per the report, this will reduce the need for graphics processing units (GPUs) and energy.

According to the bank, cryptocurrency mining has significantly affected the gaming graphics industry over the past 18 months, generating an expected 14% of revenue in 2021 while also significantly contributing to a severe graphic scarcity that increased the total mix and cost.

Although GPU demand is on the decline, Nvidia is less vulnerable to the need for mining cryptocurrencies than it was in 2017–19, according to the paper. Additionally, the bank observed that in the first half of the year, demand for graphics cards from crypto mining started to decline.

Nvidia and AMD have asserted that they reduced the likelihood of negative cryptocurrency-related scenarios. Still, Morgan Stanley believes that gaming GPU prices will decline in the first quarter of next year. This will be caused by several variables, such as weaker demand due to a decline in working from home, the move of Ethereum to PoS, and difficult sequential comps following the rebuilding of channel inventories in 2022.

As previously reported, mining revenue has hit the lowest point in over a year. Many miners have started selling their gear on the second-hand market. This has further reduced graphic card prices.

Does Ethereum merge have no benefits?

According to Morgan Stanley, the merge is anticipated by September or as early as August. However, given prior delays, it would not be surprising to postpone it to early 2019.

The research also said that switching to PoS will not address Ethereum’s scalability issues, including its poor transaction throughput or transaction costs. Going by Morgan Stanley’s report, the merge will bring no added benefits except the reduction in energy usage. This is sure to vibe with the environmental concerns regarding cryptocurrencies, but it may leave miners in the dirt.

Additionally, a recent report by Bank for International Settlements (BIS) talks about how Ethereum miners manipulate the order of transactions to maximize profits. The practice is called “miner extractable value” or MEV. As per the report, Ethereum’s move to PoS will not change this practice.