A transition to a fully proof-of-stake (PoS) consensus mechanism, dubbed "the merge" by cryptocurrency enthusiasts, won’t fix Ethereum’s (CRYPTO: ETH) issues, according to CoinDesk citing a Morgan Stanley (NYSE:MS) analyst report.
What Happened: A switch to PoS will not address the network’s scalability issues pertaining to its low transaction throughput and high transaction costs.
The merge will also make ETH miners redundant and slow the demand for graphics processing units (GPUs), the analysts added.
See Also: Ethereum To Test Merge With Ropsten By The End Of Tomorrow: But What Does It Even Mean?
"Cryptocurrency mining had a dramatic impact on the gaming graphics markets in the last 18 months, driving an estimated 14% of revenue in CY21 but also substantially contributing to a major graphics shortage which boosted overall mix and pricing," read the report.
These estimates were based on NVIDIA (NASDAQ:NVDA) Corporation’s (NASDAQ: NVDA) massive decline in revenue from its Crypto Mining Processor (CMP) product line reported earlier this year, along with data from Advanced Micro Devices (NASDAQ:AMD) Inc.’s (NASDAQ: AMD) earnings report.
Most ETH miners will sell used GPU equipment because it will not be possible to mine other cryptocurrencies.
However, there is a silver lining: proof of stake is more sustainable since it uses 90% less energy.
See Also: What Is Cryptocurrency Mining?
Price Action: According to Benzinga Pro, ETH was trading at $1,206 at press time, down 1.74% over the last 24 hours.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.