The “Green ETH” Narrative to Boost Investment and Adoption, Experts Say
The removal of Ethereum’s energy-intensive proof-of-work (PoW) system should see Ether (ETH) “flood into the institutional world”, according to a number of fund managers and co-founders.
On Thursday, Ethereum officially transitioned to a Proof-of-Stake (PoS) consensus mechanism, which is expected to reduce the power consumption used by the network by 99.95%, according to the Ethereum Foundation.
The upgrade effectively ended the need for the Ethereum network to rely on miners and power-hungry mining hardware to validate transactions and build new blocks, as these functions are now replaced by validators that “stake” their ETH.
“Merger will reduce global electricity consumption by 0.2%” – @drakefjustin
— vitalik.eth (@VitalikButerin) September 15, 2022
In a statement to Cointelegraph, Charlie Karaboga, CEO and co-founder of Australian fintech firm Block Earner, said the network’s transition to PoS “will lead the future of money to be more internet-based.” .
He said Ethereum would become “the settlement layer that everyone will accept and trust – especially when the spotlight shines brighter than ever on the issue of sustainability in crypto mining.”
Markus Thielen, chief investment officer of digital asset manager IDEG, said he had discussions with sovereign wealth funds and central banks to help them build their digital asset portfolios, but direct investments often had been “rejected due to energy issues”.
But, now that the Ethereum network has moved to PoS, this issue is much less of a concern, he said:
“While demand has been strong, the missing link has been an underlying zero-emissions financial infrastructure. With Ethereum moving to PoS, this clearly solves this last pillar of concern.
Apollo Capital’s Henrik Andersson told Cointelegraph that ESG has become an “important factor” in institutional investment decision-making over the past few years.
Andersson said he believes the 99.95% reduction in power consumption on Ethereum would significantly improve ETH’s ESG score, which in turn would “make it more attractive to institutional investors” in the long run. term.
Blockworks co-founder Jason Yanowitz told his 92,900 followers on Sept. 15 that “Green ETH” will be the “greatest story” in crypto history, with crypto mining and PoW raging ever since. long in the industry.
Related: How blockchain technology is used to save the environment
Yanowitz noted that so far the “Bitcoin is bad for the environment” narrative has been “so impactful,” adding that it has spread like wildfire” and “probably had the biggest impact.” more negative on the performance of the asset”.
“Most large institutions now have ESG mandates,” Yanowitz said:
“Fidelity, BlackRock, Goldman, etc… whether they like it or not, they must now take into account the environmental impacts of their portfolios.”
But, this is now old news for Ethereum, with Yanowitz adding that the most important conclusion of the merger is that “Ethereum is going green”, which becomes very attractive for large companies that have ESG mandates to meet:
“This will be the best narrative crypto and ETH has ever seen. It will spill over into the institutional world, where investors will buy ETH because it satisfies their ESG mandate.