Summary: The Bitcoin price surge has contributed to multiple new applications for a Bitcoin ETF in the US. At the same time, miners are having a hard-time receiving enough mining rigs - and those having spare time are fighting against an update on the Ethereum-network.
Global chip shortage influences the Bitcoin mining industry
Over the past couple of weeks, German carmakers have reported a shortage of essential chips used in their cars, which has led to factory shutdowns and fewer cars being produced across Germany. Bitcoin and cryptocurrency miners are also reporting that the chip shortage is starting to influence them as they are a fundamental part of the mining rigs used in their operation. To make matters worse, the demand for mining rigs has surged over the past months due to the surge in cryptocurrency prices, making the shortage of mining rigs even worse. The shortage contributes to slowing down the growth in hash rate – a term used for how much computer power is used to mine cryptocurrencies. Furthermore, it makes it more difficult for smaller miners to operate, leading to a concentration of the mining power on fewer hands over time. In theory, making the network less decentralized.
Miners against the Ethereum developers
A lot is going on concerning the further development of Ethereum with the ETH 2.0 launch. However, before the network experiences the full effect of ETH 2.0, another update is in the pipeline. The update is called EIP 1559. Its purpose is to change the way users are paying miners for transactions. Going from a solely bidding model to a fixed fee – with the option to tip miners, the idea is to make the fees more predictable and less expensive. Furthermore, some of the fees will automatically be burned. The burning mechanism of transaction fees will help keep inflation at a minimum. As miners are being compensated the fees in return for processing transactions, they are – naturally – not keen on the update. One of the third-biggest pools, called Ethermine, accounting for close to 20% of the hash rate on the network, has joined several other minor pools against the update. One of the other bigger miners on the network, F2Pool, is on the other hand, voting for the update. If the miners against the update attract 51% of the hash rate to the movement, they are, in theory, able to cancel the update. It will most likely not go that far, but my main concern stretches further to ETH 2.0. If a notable group of miners are greatly against this update, what about ETH 2.0 then? ETH 2.0 will, over time, make miners completely unnecessary, not only reducing their compensation. Therefore, as we get closer, we may experience miners trying to fork Ethereum – which means copying the cryptocurrency to form a new version, just like Bitcoin Cash is a fork of Bitcoin - and by that, contribute to chaos in the community. Or will they go with the flow and let ETH 2.0 happen without any problems? Only time will tell.
The ongoing question on a potential Bitcoin ETF continues
For years, it has been a topic among cryptocurrency enthusiasts whether an American-based Bitcoin ETF would be approved or not, as many investors are preferring investing in an ETF. So far, the luck has not been with the ones hoping for this to come into effect as no ETF has been approved by the SEC, even though many firms have tried. Many firms are still hopefully submitting their application to the SEC for a Bitcoin ETF. Several companies have submitted their application last week – including a Texas-based family investment fund. However, yesterday Ark Investment Management’s CEO, Cathie Wood, said that she doubts the SEC will approve an ETF before the cryptocurrency’s market capitalization hits $2 trillion. The current market capitalization is slightly below $600 billion. Ark Investment Management is currently having over $10 billion under its management.
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