Ethereum co-founder Vitalik Buterin thinks that crypto is in a bubble and that the energy debate swirling around Bitcoin (BTC) mining requires the blockhain to embrace technological change.
Buterin spoke with CNN on Tuesday, noting that "We've had at least three of these big crypto bubbles so far." He added that it could have ended already, or it could end months from now.
i like this kid https://t.co/4wRBuwSObQ— Dmitry ButΞrin (@BlockGeekDima) May 20, 2021
The 27-year-old didn’t comment on whether the recent crash that sent Bitcoin down to around $30,000 was an indicator of the crypto bubble ending, but said:
"Often enough, the reason the bubbles end up stopping is because some event happens that just makes it clear that the technology isn't there yet."
One factor in the Bitcoin price crash was Elon Musk’s announcement of his concerns over Bitcoin’s power usage. Philip Gradwell, chief economist of Chainalysis, said other institutional buyers may also hold concerns over crypto’s “environmental impact, use cases, illicit activity, and regulation.”
Bitcoin may get left behind
Buterin told CNN that energy concerns over Bitcoin’s proof-of-work mining are justified.
"The resource consumption is definitely huge. It's not the sort of thing that's going to break the world by itself, but it's definitely a significant downside."
Ethereum is in the process of moving from proof-of-work to a proof-of-stake consensus algorithm, through the forthcoming transition to Ethereum 2.0. It will dramatically decrease Ethereum’s energy consumption, with Nimbus estimating proof-of-stake to be up to 99% more energy efficient. Buterin emphasized the importance of the transition, noting that:
"We go from consuming the same energy as a medium-sized country to consuming the same energy as a village."
Buterin added that the power consumption of Bitcoin mining and the hardware required could see increasing calls from its community to either switch to proof-of-stake or move toward a hybrid model.
"If Bitcoin sticks with its technology exactly as it is today, there's a big risk it will get left behind."
While that call will undoubtedly be controversial, Bitcoiners may welcome Buterin’s assessment of Musk’s Twitter antics. He noted that this is a relatively new phenomenon in the crypto space, and Musk’s influence will wane over time. "I think it's reasonable to expect a bit of craziness," he said. "But I do think that the markets will learn. Elon is not going to have this influence forever."