Ethereum Cryptocurrency Price Plummets After Its 'Green Transformation'

Ethereum, the second largest cryptocurrency by market capitalization, has completed this Thursday a technical transformation process that should allow it to gain efficiency and reduce the energy consumption derived from its mining process by up to 99.5%.

The mutation, which has been baptized with the name of

, should also serve to extend its use within the financial market.

Investors have not applauded the changes in that asset, which has lost up to almost 10% of its value, deepening the crisis in the cryptocurrency market, which has plummeted almost 70% since reaching its peak in November 2021.

“And we're done!

Happy Merge everyone.

It is a great time for the Ethereum ecosystem.

All those who have helped make it a reality should feel very proud today, ”said Vitalik Buterin, co-founder and main visible face of that project, through his Twitter account.

The cryptocurrency is still far behind bitcoin, which is the reference within that universe, by market value.

However, it has a very wide field of application, including NFT exchanges.

“Ethereum is possibly the largest ecosystem within crypto assets.

Thousands of projects and decentralized applications (dapps) rely on the Ethereum blockchain to store data and manage their dapps”, explains Simon Peters, analyst at the eToro platform.

One of the big problems with these assets, especially bitcoin, is the amount of energy needed to mine them.

Those who were dedicated to this activity have even taken over countries like Iceland, where the temperature is low and the energy was cheaper.

In 2018, this industry already consumed more electricity than all the families that lived in that country.

The European Central Bank (ECB) has not only warned of the consequences of cryptocurrencies due to their lack of regulation, but also because their energy consumption puts at risk the end of the use of fossil fuels, planned by the European Union for 2050.

And we finished!

Happy merge all.

This is a big moment for the Ethereum ecosystem.

Everyone who helped make the merge happen should feel very proud today.

— vitalik.eth (@VitalikButerin) September 15, 2022

The operation undertaken by Ethereum tries to correct, according to its founders, this inconvenience by reducing the necessary energy use by 99.5%.

Kelly Chia, from Julius Baer, ​​agrees that the generation of these cryptocurrencies will no longer require the use of “energy-intensive mining” when moving from the current so-called

(POW, for its acronym in English,

, that requires a not insignificant dedication to approve a transaction, to the

, which involves choosing a random validator to approve an operation in exchange for a reward.

Analysts were very attentive to the evolution of that operation.

Not only because of the final climatic impact that this transformation may have, but also because of the consequences that an eventual failure could have in a market that has been particularly punished in recent months.

According to CoinMarketCap, the cryptocurrency market has plunged almost 70% since it peaked in November 2021. Then, its capitalization exceeded $2.9 trillion.

Now, this is 987,000 million.

In the event that the Merge had derailed, analysts feared catastrophic effects for all of these assets.

That finally has not happened.

According to Julius Baer, ​​Ethereum is “in a good position” relative to other coins or

.

Contrary to other cryptocurrencies, analysts believe that it could enter a deflationary path.

According to eToro, the amount of new Ethereum in circulation will drop by around 90%.

"Less supply and more demand could drive the price up," he notes in a note.

It was not the case on the first day after the transformation, in which the holders of that currency continued to sell.

Both community institutions and national regulators have warned about cryptocurrencies.

In Spain, the National Securities Market Commission (CNMV) has decided to limit the advertising of these assets given the "high risk" that exists for savers.

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