Some Bitcoiners have been reluctant to say that the Ethereum merge will have any impact on their crypto asset of choice, but don’t count Dan Held among them.
The head of growth marketing at Kraken and prominent Bitcoin influencer, who these days calls himself a Bitcoin "mostamalist" (rather than the fraught "maximalist"), said on the latest episode of Decrypt's gm podcast that the upcoming Ethereum merge will likely intensify attention from environmentalists who decry Bitcoin’s energy consumption.
"I do think it will add pressure to Bitcoin's energy consumption, because they'll point to Ethereum and say, 'Hey, this blockchain'—I'm talking from a layperson's perspective here—'this blockchain isn't using very much energy at all, and you're using a lot.' And that's it. They're not going to understand proof of stake versus proof of work, or anything else."
The merge will see the Ethereum network switch from a proof-of-work consensus model to proof of stake. It’s expected to take place on or around September 15.
Switching to the new consensus model should cut the energy consumption of the Ethereum network by 99%, according to the Ethereum Foundation. But despite the added pressure that may bring upon Bitcoin from environmental critics, Held said he still hasn’t heard a credible reason for Bitcoin to abandon proof of work.
For starters, he referenced some of the security concerns surrounding the merge. Many users have pointed out the dominance of a few key staking pools in securing the network, and the fact that government regulators could compel them to block transactions from sanctioned entities like Tornado Cash is a huge area of concern and questions the notion of Ethereum's decentralization.
“If there’s a catastrophic failure in the Ethereum protocol due to these trade-offs, well, yeah sure, you cut your energy consumption down by 99% but then the protocol failed," Held said. "I’m not saying that it will, I'm saying that it opens up Ethereum to some technical attack vectors that the Bitcoin community does not want to take on. And that’s why they're sticking with proof of work.”
Held added that one political element he believes is working in Bitcoin's favor is the broader reevaluation of ESG policies (environmental, social, and governance). It’s a catch-all term that’s been applied to everything from investment products, government policies, and corporate values.
Some of that has surrounded the U.S. Securities and Exchange Commission’s attempts to define the term and regulate how it’s applied to investments. But even more pressing in the ESG upheaval has been uncertainty in Europe on whether the continent will have enough energy to get through the winter.
As of Monday afternoon, Russia, which provided 40% of Europe’s natural gas last year, has indefinitely cut off supplies to the continent in response to what it calls “punitive economic sanctions,” according to Russian-language outlet Interfax.
“I do think we’re seeing kind of a global, anti-woke energy pushback,” Held said. “So it does come at a very, very good time for Bitcoin, when Europe is about to freeze due to its egregiously dumb ESG policies... I believe that, yes, global warming is caused by people, and global warming exists. I think that politically charged ESG requirements may or may not actually help to solve the problem."