Several fund managers and co-founders say that when Ethereum gets rid of its energy-intensive proof-of-work (PoW) system, Ether (ETH) will “flow into the institutional world.”
On September 15, Ethereum officially switched to a proof-of-stake (PoS) consensus mechanism. The Ethereum Foundation says that this will cut the network’s energy use by 99.5%.
Because of the upgrade, the Ethereum network no longer needs miners and their energy-hungry mining hardware to validate transactions and build new blocks. Instead, validators who “stake” their ETH now do these things.
Related: On a green day, Ethereum gains 10%.
Charlie Karaboga, CEO and co-founder of the Australian fintech company Block Earner, said in a statement to Asian Trade that the switch to PoS would “drive the future of money to be more internet-based.”
He said that Ethereum would become “the settlement layer that everyone will trust and accept,” especially now that the issue of sustainability in crypto mining is getting more attention than ever.
Markus Thielen, the Chief Investment Officer of digital asset manager IDEG, said that he had talked to sovereign wealth funds and central banks about helping them build their digital asset portfolios, but direct investments were often “voted down because of energy concerns.”
But now that the Ethereum network has switched to PoS, he said, this problem isn’t as big of a deal:
“Demand has been high, but there hasn’t been a zero-emissions financial infrastructure to back it up. With Ethereum moving to POS, this last worry is clearly taken care of.
Henrik Andersson of Apollo Capital told Asian Trade that ESG had become a “big factor” in institutional investment decisions in the last few years.
Andersson said that he thinks cutting Ethereum’s energy use by 99.95% would make ETH’s ESG score much better, which would “make it more appealing to institutional investors” in the long run.
Jason Yanowitz, co-founder of Blockworks, told his 92,900 followers on September 15 that “Green ETH” will be the “best story” in the history of crypto, which has been plagued by crypto mining and PoW for a long time.
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Yanowitz said that the story that “Bitcoin is bad for the environment” has been “so powerful” up until now. He also said that it “spread like wildfire” and “has probably had the most negative effect on the performance of the asset.”
Yanowitz said that most large institutions now have ESG mandates.
“Fidelity, BlackRock, Goldman, etc., have to think about how their portfolios affect the environment now, whether they like it or not.”
Related: Before the Bellatrix upgrade, 74% of Ethereum nodes were “merge ready.”
But that’s old news for Ethereum now, and Yanowitz said that the most important thing to learn from the Merge is that “Ethereum becomes green,” which makes it very attractive to large companies that have to follow ESG mandates:
“This will be the best story ever told about crypto and ETH. It will move into the institutional world, where investors will buy ETH because it meets their ESG mandate.
