Welcome to This Week in Crypto, where we bring you the latest developments shaking up the crypto world. Ethereum’s co-founder Vitalik Buterin has revealed ambitious plans to boost the network’s scalability with “The Surge,” aiming for over 100,000 transactions per second. Meanwhile, Federal Reserve Governor Christopher Waller highlighted the potential of well-regulated stablecoins to improve the global financial system. Lastly, Bitcoin’s mining difficulty has reached an all-time high, raising concerns about the potential consolidation of smaller mining firms as competition heats up. Stay tuned for more insights into these stories and how they might impact the future of crypto.
Vitalik Buterin Shares Vision for Ethereum’s Next Phase
Ethereum co-founder Vitalik Buterin recently outlined his vision for the next phase of the blockchain’s development, called “The Surge.” This phase aims to dramatically increase Ethereum’s transaction capacity to over 100,000 transactions per second by leveraging layer-2 scaling solutions and sharding. Layer-2 solutions will take much of the transaction processing off the main chain, allowing Ethereum to remain decentralized and secure while providing faster speeds and lower fees. The goal is to create a seamless ecosystem where Ethereum’s main chain serves as a secure foundation, and layer-2 protocols handle the scaling needs.
Buterin emphasized the importance of balancing decentralization, scalability, and security—known as the scalability trilemma. He highlighted the need for cryptographic solutions to maintain transaction integrity without overburdening the network. Another focus is improving interoperability between layer-2 networks, ensuring that Ethereum functions as a cohesive ecosystem rather than fragmented blockchains. Buterin’s roadmap builds on the success of 2022’s “The Merge” and looks ahead to future upgrades, such as the Pectra update, expected in 2025, which will further enhance scalability and staking rewards.
Stablecoins Could Benefit Financial System, Says Fed Official
Federal Reserve Governor Christopher Waller recently emphasized the potential benefits of well-regulated stablecoins for the financial system. Speaking at the Institute of Advanced Studies, Waller highlighted how stablecoins could reduce the need for payment intermediaries, leading to lower transaction costs globally. Waller also argued that decentralized finance (DeFi) could coexist with traditional finance, rather than replacing it, and contribute to extending the dominance of the US dollar.
Stablecoins have also been seen as a way to preserve US dollar dominance, with former Speaker of the House Paul Ryan noting that they can boost demand for US Treasurys and the dollar, helping it compete against global currencies like the Chinese yuan. Senator Bill Hagerty introduced the Clarity for Payment Stablecoins Act in October, which includes provisions to regulate stablecoins at the state level. Despite these efforts, recent data shows the US lagging in stablecoin adoption, with US-regulated exchanges handling less than 40% of stablecoin transactions in 2024, while offshore exchanges have taken the lead with 60%.
Rising Bitcoin Mining Difficulty Could Trigger Consolidation Among Miners
The Bitcoin hashrate has hit a new all-time high, reaching 769.8 exahashes per second (EH/s) on October 21, signaling the increased security of the network. However, the rising hashrate also increases the cost of mining, which, combined with the upcoming Bitcoin halving in 2024, could force smaller mining firms to either consolidate or seek more cost-efficient operations to stay profitable.
As mining becomes more expensive, smaller firms with outdated or inefficient equipment may struggle to compete, potentially leading to a wave of consolidation within the industry. According to Nazar Khan, co-founder of Bitcoin mining firm TeraWulf, companies that can source low-cost power and use energy-efficient equipment will have a competitive advantage. Despite these challenges, major mining firms are holding onto their Bitcoin, with data showing minimal selling activity from miners, even as mining difficulty continues to rise.
