To be sure, the entire cryptocurrency market is down from its peak reached last fall. Since November, the price of Bitcoin (BTC-USD), the biggest digital token by market capitalization, has fallen 41% to now trade at just over $40,000. Contrary to the popular narrative, cryptocurrencies have been trading in tandem with stocks in recent months.

As the S&P 500 and Nasdaq indexes have slumped, so too have digital coins and tokens. However, concerns are becoming particularly acute regarding Ethereum given the continued delay in its long-awaited and much hyped upgrade.

The Merge

The upgrade of Ethereum from an energy intensive “proof of stake” model to a more environmentally friendly “proof of work” operating model is known in the cryptocurrency world as “The Merge.” It is a years-in-the-making software revision that is expected to finally be completed later this year.

Once finished, the switch to a proof of work model is expected to dramatically reduce Ethereum’s energy use, as well as enhance the performance and returns of the blockchain network. This may be seen as a critical widespread adoption of decentralized finance (DeFi) that enables people to transfer money without an intermediary such as a bank or credit union.

By some estimates, about $10 billion has been spent on the upgrade that will eventually create “Ethereum 2.0,” as developers call it. However, completion of the upgrade has been continuously delayed and the end date pushed back, raising concerns among even the biggest crypto bulls.

Much of the delay has been blamed on a worldwide shortage of graphics processing units (GPUs), a specialized processor originally designed to accelerate graphics rendering that is also a central component of the Ethereum upgrade. Originally scheduled for completion this June, the timing for completion of The Merge is now unknown, though terms like “year end” are being batted about.

Mixed Outlook

The reason for all the consternation related to the upgrade to Ethereum 2.0 is that, once finished, the upgrade is expected to lower Ethereum mining’s energy consumption by 99.95%. Rather than requiring cryptocurrency miners to leverage energy intensive GPUs to solve complicated and time consuming cryptographic equations to verify the blockchain, the proof-of-work model will verify transactions based on a person’s existing stake in Ethereum.

One of the main criticisms of cryptocurrencies is that they use excessive amounts of power and are bad for Mother Earth. Governments around the world have been looking to reign in crypto mining to lessen its environmental impact.

While a lot of the current coverage of Ethereum has focused on the date when the proof of work upgrade will be completed, there are some people in the cryptoverse who are openly questioning the expected benefits that will come with the transition to Ethereum 2.0.

Naysayers claim that the post-merge staking rewards for Ethereum will be much lower for miners than anticipated, and that much of what has been promised amounts to little more than hype. However, others remain extremely bullish on Ethereum and predict that the price of the cryptocurrency could reach $3,700 or $4,000 by the end of 2022. Of course, much of what will happen remains unknown.

Hold Off On Ethereum For Now