ETC Group launches merge-rejecting Ethereum ETF
ETC Group, one of the largest crypto ETF providers by assets under management, is launching an Ethereum ETF that rejects the upcoming merge.
The ETC Group Physical EthereumPoW (ZETW), which launches this month, will invest in the old Ethereum which stays loyal to the energy-sucking proof of work blockchain that's held the network together the past five years. Old Ethereum will remain supported by a group of rebel Ethereum miners after the merge. (Discussion below).
Meanwhile, ETC Group’s headline Ethereum ETF, the ETC Group Physical Ethereum (ZETH), will invest in new Ethereum, which moves over to the much more energy efficient proof of stake blockchain.
Bernie’s commentary – bankrupt miners, Nvidia’s share price, curious market makers
Some thoughts on this launch in no particular order:
- The Ethereum merge is about to bankrupt plenty of Ethereum/bitcoin miners. Just look at the share prices of the publicly listed ones (Hut 8, Galaxy Digital, Hive Blockchain, Mawson Infrastructure, etc). Reddit is flooding with miners—whose frustrations will be at the base of this ETF.
- Nvidia has been a stock market darling for five years, buoyed by bitcoin miners’ insatiable appetite for its graphics cards. That’s about to end, and miners may flood the market with second-hand graphics cards to meet their debts. Nvidia’s stock is down 50% this year.
- Proof of stake is more environmentally friendly. But it undermines cryptocurrencies’ claims to being decentralised.
- I wonder what market makers will do with this fork. I know under the rules governing these crypto ETFs, when a fork occurs, forked assets must be sold and the proceeds used to buy specific crypto the fund is obliged to hold. But I wonder how market makers price a newly-forked asset for which there is no established market. NAV calculation is especially difficult in crypto, as there is no close.