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Because the Ethereum blockchain is in the process of switching from an energy-intensive proof-of-work system to a proof-of-stake system, which removes miner incentives, crypto miners have been exhibiting increased interest in Ethereum Classic. The procedure is referred to as the Merge.
A branch or offshoot of Ethereum is Ethereum Classic, whose token is ETC. Ethereum Classic is appealing to miners because, unlike Ethereum, it does not involve system changes.
But wait, said senior research analyst Tom Dunleavy of crypto data and analysis company Messari.
He claimed Ethereum Classic has little long-term potential in a recent report. Even though the price of ETC can increase in the days before the Merge, it is doubtful that the token would continue to increase over time.
According to Messari, Ethereum mining presently accounts for 97 percent of GPU mining revenue and generates a daily income of $24 million.
After the Merge, users will be able to validate transactions by "staking" ETH rather than running power-hungry computations, making Ethereum-based mining gear almost completely unnecessary.
According to Messari, miners will be compelled to sell their equipment or convert to mining ETC, which presently accounts for 2% of GPU mining revenue and generates roughly $700,000 in daily revenue. Because of this significant profit disparity, even if a "substantial number" of miners switch to ETC, mining difficulty would rise sharply, making many miners unprofitable.
After the bitcoin (BTC) mining pool AntPool contributed $10 million towards the development and investigation of Ethereum Classic mainnet apps, ETC rose by over 30% the previous week.
But according to Messari, ETC has a history of experiencing price increases whenever it makes crypto news, so its recent gain is not indicative of the network's long-term expansion.
Messari claims that Cardano has more than twice as many active addresses as Ethereum Classic. The network has not seen a significant change in transaction volume since 2018 and is currently less than one-tenth as developed as Ethereum and Cardano.
After all, Messari noted, "prices should be fundamentally linked to network usage and underlying economic activity." There isn't much of either, which is unfortunate for ETC holders.
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