Ethereum Foundation researcher Justin Drake argues Ether will become \u201cultra sound\u201d money \u201csoon enough\u201d as its issuance decreases, while its competitor, Bitcoin, is \u201ccooked\u201d as it moves closer to its 21 million supply cap \u2014 sparking debate between the two communities. <\/p>\n
Drake said <\/a>in a Feb. 5 X post that for Ether (ETH<\/a>) \u201cto become ultra sound again, either issuance has to decrease or the burn has to increase.\u201d<\/p>\n \u201cI believe both will happen,\u201d he said.<\/p>\n Ethereum became deflationary after the Merge in 2022 but started to increase<\/a> in April 2024 following the Dencun upgrade<\/a>, which reduced fees for layer-2 networks and the overall amount burned.<\/p>\n However, Drake compared ETH\u2019s issuance with that of the Bitcoin blockchain, finding that Bitcoin added 657,000 Bitcoin (BTC<\/a>) to supply since the Dencun upgrade, compared to 469,000 Ether added to the Ethereum network during the same period. That Bitcoin is worth around $63.4 billion at current prices, while the Ether is worth just $1.23 billion. <\/p>\n \u201cToday BTC supply grows 0.83% per year, 66% faster than ETH,\u201d Drake said.\u00a0<\/p>\n ETH and BTC issuance since Ethereum\u2019s Merge: Source: <\/em>ultrasound.money<\/em><\/a><\/p>\n<\/figcaption><\/figure>\n Drake said that the Bitcoin blockchain\u2019s 21 million supply cap could lead to long-term security risks, as miner revenue mostly comes from block rewards \u2014 around 99%, compared to just 1% from network fees over the past week. He added that Bitcoin was vulnerable to security risks due to the relatively low cost to attack the network.\u00a0<\/p>\n \u201cThe Bitcoin blockchain is cooked. It takes roughly $10 [billion] and access to 10 [gigawatts] to permanently 51% attack Bitcoin. The cost is peanuts for nation-states.\u201d<\/p><\/blockquote>\n \u201cIt\u2019s utterly insane to me that Bitcoiners still don\u2019t see the obvious catastrophe headed their way,\u201d added<\/a> Ethereum educator Anthony Sassano.<\/p>\n However, analyst James Check told Cointelegraph that critics of Bitcoin\u2019s sustainability fail to account for considerations such as energy advancements, mining efficiency, and economic incentives.\u00a0<\/p>\n If Bitcoin reaches reserve status, high fees are inevitable, similar to how institutions pay to store gold securely, he said.\u00a0<\/p>\n The cost of ASIC mining rigs<\/a>, which determine profitability, is also overlooked. Bankrupt miners sell rigs at lower prices, allowing new entrants to continue mining and keeping the network secure.<\/p>\n Over time, network fees will sustain operational costs while the subsidy has already covered capital expenditures, he added.<\/p>\n Check also argued that advancements in energy sources, especially nuclear power<\/a> and wasted energy utilization, will reduce mining costs.<\/p>\n He claimed mining stabilizes energy grids through demand response, reducing maintenance costs for operators. Some grids may eventually find it efficient to mine Bitcoin as a loss leader, he said.<\/p>\n \u201cThis topic is very complex, but I am of the view that arguments against Bitcoin\u2019s sustainability have not considered the deeper picture. It is a multivariate problem, and one I am quite constructive on long term,\u201d Check said.<\/p>\n \u201cJustin [Drake] is claiming that plugging in and running a small country\u2019s worth of power is a cheap and easy exercise. One cannot begin to quantify how unserious this claim is.\u201d<\/p><\/blockquote>\n Related: <\/strong><\/em>‘The worst thing that happened to Ethereum’ \u2014 Bitcoin up 160% since the Merge<\/strong><\/em><\/a><\/p>\n Meanwhile, Drake acknowledged that Ethereum has its own problems, such as the incentivizing of excessive staking, which displaces ETH as \u201cpristine\u201d collateral. He also said it has systemic risks with liquid staking platforms such as Lido.\u00a0<\/p>\n He proposed a \u201cCroissant Issuance\u201d model, which is a declining supply issuance that drops to zero when 50% has been staked and a peak issuance capped at 1% per year to allow market-driven equilibrium.<\/p>\n Croissant Issuance model. Source: Justin Drake<\/em><\/p>\n<\/figcaption><\/figure>\n Magazine: <\/strong><\/em>XRP to $4 next? SBF\u2019s parents seek Trump pardon, and more: Hodler\u2019s Digest<\/strong><\/em><\/a><\/p>\nBitcoins Bitcoiners bite back\u00a0<\/h2>\n