In a recent Morgan Stanley report, the giant said that if Ethereum moves to proof-of-stake (PoS), as planned, it will remove the need for miners and slow demand for graphics processing units (GPUs), dramatically reducing energy requirements.
In the past 18 months, crypto mining has had a massive impact on the gaming graphics market. It contributed to around 14% of revenue in 2021.
Although at the same time, this demand resulted in “substantially contributing to a major graphic shortage which boosted overall mix and pricing.”
According to the report, GPU demand should slow but Nvidia is less exposed to cryptocurrency mining demand than it was in 2017-19.
Also demand from crypto mining has already started winnowing down in the first half of the year.
Nvidia and AMD have argued that they have minimized the downside scenarios from crypto. However, Morgan Stanley firmly believes that there will be a correction lower in gaming GPU in the first quarter of next year.
The correction can be attributed to a combination of reduction in working from home, cryptocurrency migration to PoS, and “tough sequential comps after channel inventory rebuild in 2022.”
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The bank also believes that most Ethereum miners will sell their used GPU equipment after the Merge as it is currently not profitable for all these computers to mine other cryptocurrencies.
The report also stated that the net Ether supply is expected to fall after the Merge, and may even turn contractionary, so it is unlikely that all the miners become stakers.
Morgan Stanley also believes that shifting to PoS will not solve Ethereum’s scaling problems such as the number of transactions per second or result in lower transaction fees.
