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September 9, 2022

Arthur Hayes’s Thoughts on Ethereum Merge

Arthur Hayes, the co-founder of BitMEX, feels that further attempts to maintain the Ethereum Proof-of-Work (PoW) beyond the “Merge” event would be mostly futile. According to the crypto industry veteran, an Ethereum PoW chain would “have no users” and will suffer the same fate as previous Bitcoin splits.

Arthur Hayes discussed the Merge and other important Ethereum network concerns in a recent Unchained podcast episode. When asked whether he expected a PoW Ethereum version to exist after the merge, the BitMEX co-founder pointed out that Ethereum’s value derives from its users.

The majority of these users are not “technologically aware” and are uninterested in the underlying consensus process. Furthermore, the “bulk of service providers and large dApps on Ethereum are moving,” making it unlikely that users who remain would be able to engage with any apps.

Hayes cited Tether and Circle’s backing for the PoS network as proof that value would swiftly shift away from the older Ethereum version. As a result, he claims, “They [ETH PoW proponents] will have no users.”

Hayes compared the possible Ethereum PoW chain to recent Bitcoin splits, many of which have underperformed.

“A similar kind of study may be performed on Bitcoin Cash (BCH) and all of the numerous Bitcoin forks that occurred during the blocksize dispute in 2017.” “How many of them have outperformed the assets they were meant to replace in terms of price performance?” he said.

Bitcoin Cash (BCH), the most valued Bitcoin split, now has a $2.5 billion market cap, which is less than 1% of Bitcoin’s roughly $400 billion worth.

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“If it has a value over zero, it’s essentially free money,” the BitMEX co-founder remarked of his trading strategy for possible Ethereum PoW currencies. “I’ll attempt to sell it at a very good moment,” he continued. Maybe they’ll come out right now, maybe not. The specifics will be determined by the hash rate, price on various exchanges, derivatives, and mispricing.”

The Ethereum “Merge” is already in progress. On September 6, the first step, codenamed “Bellatrix,” took place. The last stage, dubbed “Paris,” is scheduled for September 15-20.