Around the block

Special Commentary

September 12, 2022

Monthly cryptocurrency and blockchain-related highlights from the Truist Investment Advisory Group

Off the block

The Ethereum blockchain will undergo its much anticipated “Merge” next week. This changes the way Ethereum transactions will be settled and validated. It shifts the burden of validation from energy intensive crypto mining to existing Ethereum owners who will be compensated for their efforts. We highlight this in our chart-of-the-month in the right panel.

Some context on Ethereum and the Merge:

  • Ethereum has a market cap of $209 billion which would make it the 28th largest company in the S&P 500 if publicly traded, just ahead of Disney.
  • Year-to-date, Ethereum has generated $8.2 billion in mining revenue and totaled over $6 trillion in transaction value over their network.
  • Bitcoin and Ethereum account for the majority of crypto miner revenue. As Ethereum “proof of work” mining is replaced with “proof of stake” validation, some miners could lose up to 50% of current revenue.
  • The negative economic impact to miners will remain a heightened risk for investors.

Industry developments

  • Snapchat, after weak earnings, announced it will close its Web 3.0 team as well as its augmented reality (AR) team to cut costs.
  • GameStop entered a partnership with the FTX cryptocurrency exchange to offer an interactive experience for the gaming and crypto community.

Regulatory developments

  • SEC chairman Gary Gensler is signaling support for Congress giving regulatory authority over Bitcoin to the CFTC.
  • In Europe, the MiCA (Markets in Crypto Assets) regulation has announced its proposed regulatory language could be finalized in the next 60 days to be implemented in 18 months in the EU.

To read the publication in its entirety, select "Download PDF," below.

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