Successful Ethereum Merge Expands BTCS Rewards
September 19 2022 - 8:35AM
BTCS Inc. (Nasdaq: BTCS) (“BTCS” or the “Company”), a blockchain
technology-focused company and the first Nasdaq listed U.S. public
company to run Ethereum validator nodes, announces how the success
of Ethereum’s Merge enhances its value proposition.
Impact of Merge on BTCS The
Merge offers the potential for operators such as BTCS, which
currently runs 240 validator nodes and has staked over 8,350 ETH to
see a material increase in its ETH rewards, potentially driving
increased revenue.
“Our decision to secure Ethereum’s
Proof-of-Stake (“PoS”) beacon chain in early 2021 has proved sound.
With the success of the merge, our conviction that Ethereum would
successfully transition to a greener and more ESG-friendly chain
has now come to fruition” stated Charles Allen, Chief Executive
Officer of BTCS. “Not only will the merge dramatically increase our
rewards, but it should also improve scalability, increase energy
efficiency by 99.95%, and enhance the security of Ethereum’s
blockchain” continued Allen.
“Imagine a diesel-engine freight train moving at
the speed of light carrying items of significant value like digital
assets and banknotes. The diesel engine had served the train well
in powering the transportation of goods. However, now imagine that
there are a few problems with the diesel engine that would be
eliminated if a newer, electric engine was swapped in while the
train was still driving. The diesel engine being hinted at in the
scenario above is the Proof-of-Work (“PoW”) engine, and the Merge
is that engine swap-- Ethereum's transition into a newer electric
engine, PoS consensus algorithm” stated Allen. “Consensus
algorithms are the equivalent of engines that power some of the
largest blockchains in the world today” continued Allen.
Maximum Extractable Value (“MEV”) is a value
that can be abstracted from modifying the order of transactions
within a specific block(s). Miners largely captured MEV before the
Merge; however, now, MEV (as well as other protocol rewards and
transaction fees) will be distributed to validators.
“Following the Merge, transaction fees once
earned by miners will flow to validators such as BTCS” stated Adele
Carey, BTCS’ VP of Investor Relations. “Validator’s rewards are
also increased due to a redistribution of MEV which should benefit
BTCS,” Carey said.
What is the Merge and Why it Matters?
Ethereum’s Merge is one of the most important
events in crypto since the publication of Bitcoin’s white paper.
The transition from PoW to PoS eliminates the mining process from
Ethereum, which is the consensus algorithm Bitcoin uses for
security. Instead of being secured by miners that compete to solve
a computational puzzle the fastest, like Bitcoin, Ethereum is now
secured by collateral (staked ETH--the native token of Ethereum).
Validators deposit 32 ETH to ensure they behave in line with the
rules of the network. That 32 ETH deposit is subject to slashing,
which means if a validator’s behavior is not aligned with the
protocol’s rules it could be reduced. The Ethereum network
Post-Merge relies on validators to authenticate transactions, thus
eliminating the need for mining.
The transition to PoS will improve Ethereum in
the following ways:
-
Increased Scalability: By changing its consensus
algorithm to Proof-of-Stake, Ethereum is expected to become less
congested. One Ethereum improvement measure, Ethereum Improvement
Proposal 1559 (“EIP-1559”), tackles this challenge. Similar to a
FastPass at Disney World, all park entrants pay a base fee, but
they have the option to exercise a tip on top of the base fee to
speed things up. For more highly demanded rides, you can wait in a
queue or pay for a FastPass and guarantee your entry to the ride
after a specific time. You pay for the convenience of not waiting
in line. Similarly, EIP-1559 combines a base token fee with tips to
optimize network congestion and give people the option to pay to
speed up transactions.
-
Improved Energy Efficiency: Mining is an
energy-intensive process that requires expensive computer
equipment. The beefed-up hardware makes the computers fast enough
to mine transactions. However, those computers require tremendous
energy to operate. The mining equipment also has a limited shelf
life. Under PoW, Bitcoin uses as much energy as Argentina, which
has a population of 45 million people, as reported by Columbia
University.
-
Robust Security: Over 400,000 validators across
the entire world now secure the Ethereum network Post-Merge.
Despite that number being lower than what had been up to 1M miners
mining Ethereum at one point, the Ethereum mining pools were
dominated primarily by 3 entities, as reported by blockchain media
outlet Coindesk. Now, the Ethereum network is less susceptible to
collusion between miners who could have aspired to execute an
attack on the network during the PoW phase. Following the Merge,
attacks are more expensive and self-defeating due to slashing.
About BTCS:
BTCS is an early mover in the blockchain and
digital currency ecosystem, and the first “Pure Play” U.S. publicly
traded company focused on blockchain infrastructure and technology.
Through its blockchain infrastructure operations, the Company
secures Proof-of-Stake blockchains by actively processing and
validating blockchain transactions and is rewarded with native
digital tokens. The Company is developing a proprietary
Staking-as-a-Service platform to allow users to stake and delegate
supported cryptocurrencies through a non-custodial platform, which
it plans to integrate with its Digital Asset Dashboard, now in beta
release. BTCS’ proprietary Digital Asset Platform currently
supports six exchanges and over 800 digital assets, and the Company
plans to further broaden its suite of performance-tracking tools,
add additional centralized and decentralized exchanges, as well as
wallets, and validator monitoring. For more information visit:
www.btcs.com.
Forward-Looking
Statements:Certain statements in this press release
constitute “forward-looking statements” within the meaning of the
federal securities laws including statements regarding our optimism
of the Ethereum transition, the Ethereum transition generating
additional interest in the Company, opportunity to build value for
our shareholders. Words such as “may,” “might,” “will,” “should,”
“believe,” “expect,” “anticipate,” “estimate,” “continue,”
“predict,” “forecast,” “project,” “plan,” “intend” or similar
expressions, or statements regarding intent, belief, or current
expectations, are forward-looking statements. While the Company
believes these forward-looking statements are reasonable, undue
reliance should not be placed on any such forward-looking
statements, which are based on information available to us on the
date of this release. These forward-looking statements are based
upon current estimates and assumptions and are subject to various
risks and uncertainties, including without limitation, the rewards
and costs associated with validating transactions on proof-of-stake
blockchains, a significant decrease in the value in the crypto that
we currently own, loss or theft of the private withdrawal keys
resulting in the complete loss of digital assets and reward,
regulatory issues, unexpected issues with our Digital Asset
Platform, reluctance of users to accept our product, as well as
risks set forth in the Company’s filings with the Securities and
Exchange Commission including its Form 10-K for the year ended
December 31, 2021 and the Prospectus Supplement dated September 14,
2021. Thus, actual results could be materially different. The
Company expressly disclaims any obligation to update or alter
statements whether as a result of new information, future events or
otherwise, except as required by law.
Investor Relations:Adele
CareyVP, Investor Relations ir@btcs.com
Public Relations: Mercy
Chikoworem.chikowore@btcs.com
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