Ethereum had a rough September. Here’s why and how it’s being fixed

Published

4 years ago

October 2, 2021

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September was a rough month for crypto investors, in particular for those betting big on ether, the token tied to the ethereum blockchain.

Ether dropped 13% for the month, its second-biggest monthly decline in the past year, behind only a 16% slide in June. Bitcoin fell 7% in September.

It’s difficult to link short-term price movements to any specific event, and with the historic rally in crypto over the past 12 months, pullbacks are to be expected. Ethereum, the second most-valuable cryptocurrency behind bitcoin, is still up about 830% in the past year.

Investors are now buying the September dip. On Friday, the first day of October, ether and bitcoin both climbed over 9%.

Ether 12-month price chart

CNBC

But the September roller-coaster reflects a particularly rocky stretch for the ethereum ecosystem, which has given investors and developers reasons for concern.

The speed of the network and high transaction fees continue to be a problem. The “London” upgrade in August was supposed to make transaction fees less volatile, but it’s had a limited effect.

Meanwhile, rival blockchains dubbed “ethereum killers” are taking advantage of ethereum’s challenges.

Ethereum also unexpectedly split into two separate chains in late August, after someone exploited a bug in the software that most people use to connect to the blockchain. That exposed the network to an attack, and not for the first time.

“All these factors could be having some impact on the speculation side, no doubt,” said Mati Greenspan, founder and CEO of Quantum Economics, in an interview. “But don’t forget that ethereum has appreciated quite handsomely so far this year and the entire market seems to be in consolidation at this time. So I wouldn’t try to read too deeply into these short-term movements.”

Still, ethereum, which serves as the primary building block for all sorts of crypto projects, like non-fungible tokens (NFTs), smart contracts and decentralized finance (DeFi), has some major hurdles to overcome to fend off the emerging competition.

Ethereum’s unexpected split

A central premise of ethereum’s security stems from the existence of only one set of virtual books, meaning you can’t create coins out of thin air. That ledger has to work, because the decentralized nature of the blockchain means there’s no rule keeper or bank that sits in the middle of transactions to act as accountant.

Ethereum developers were rightly alarmed in August when the chain split because of a bug.

“This fork temporarily created two separate records of transactions on the ethereum network – like parallel books,” said Matt Hougan, chief investment officer at Bitwise Asset Management, which created the first cryptocurrency index fund.

For a while, it was unclear whether the split would lead to a “double-spend attack,” where the same token can be spent more than once and transactions can be reversed, Hougan said. Smart contracts overseeing billions of dollars in assets could have also been at risk. Smart contracts allow people to build applications on top of ethereum with self-executing code, eliminating the need of third parties to handle transactions.

Such an attack would have been difficult to execute, since it was clear which nodes were on the correct side of the split and which were not. “But in theory, there was a risk,” Hougan said.

The good news for miners and exchanges is that most of them upgraded their software as recommended and the issue was resolved relatively quickly, said Tim Beiko, the coordinator for ethereum’s protocol developers.

Auston Bunsen, co-founder of QuikNode, which provides blockchain infrastructure to developers and companies, said it was a “responsibly disclosed vulnerability.”

“This is a reminder that blockchains in general and ethereum specifically are new and disruptive technologies,” Hougan said. “They can do amazing things – settle $1 billion transactions in minutes and program money like software – but they are not fully mature.”

Bugs keep happening

The longer-term problem for ethereum is that random glitches like this keep happening.

In April, the ethereum blockchain was hit with a bug in one of the software programs used to access it. And in November, many of ethereum’s DeFi apps temporarily went down after a Geth upgrade debacle, which led to the chain splitting in two.

Geth is short for for Go Ethereum. To access the ethereum blockchain, operators and miners have their pick of software. Most use Geth, which accounts for 64% of the network.

When the ethereum blockchain broke in half a few weeks ago, it was because Geth had a bug in its consensus mechanism. That’s what creates the single source of truth for transactions so everyone sees the same thing regardless of what software they’re using.

Developers discovered the bug, put out a new release with a fix and publicly told everyone to update. A lot of users upgraded, but others didn’t. When an unknown actor exploited the bug, ethereum forked, meaning that it broke into two separate chains: one for those who had updated their software and one for those who had not.

Ethereum “sought the veneer of decentralization by having many clients, but as a consequence, they have incompatibilities,” said Nic Carter, co-founder of blockchain data aggregator Coinmetrics.

When the software programs don’t talk to one another, it creates problems for the network.

Bitcoin takes a very different approach. It relies on a highly secure software program for nodes to access the blockchain. Bitcoin developers have long sought to avoid hard forks at all costs, so all changes in the core software tend to be opt in rather than pushed out to users, according to Carter.

“Ethereum prioritizes faster development, but that comes at the cost of a more fragile set of software implementations,” Carter said.

Some crypto experts attribute ethereum’s success to its first-mover advantage. Most NFTs and 78% of DeFi apps, or dApps, run on ethereum, according to the website State of The Dapps.

That’s starting to change, thanks to the growing popularity of rival blockchains.

Even before this latest split in the blockchain, users were complaining about ethereum’s heavy congestion and high transaction fees, which touched a record of $70 earlier this year, and just this week, bounced from $20 to $46 and back down to $32.

‘Ethereum killers’

At current prices, fees continue to drive some users away.

They’re turning to blockchains like Cardano, a platform used to build dApps, and Solana, whose native coin has risen nearly 4,800% since September 2020. Launched last year, Solana is gaining traction in the NFT and DeFi ecosystems because it’s cheaper and faster to use than ethereum.

Solana processes 50,000 transactions per second, and its average cost per transaction is $0.00025, according to its website. Ethereum can only handle roughly 13 transactions per second and transaction fees are substantially more expensive than on Solana.

Institutional money is flowing. Solana just closed a $314 million private token sale led by Andreessen Horowitz and Polychain Capital.

Investors who had been largely focused on ethereum “have been increasingly diversifying their holdings to other cryptocurrencies, fueling alternative blockchains like Algorand, Solana and Cardano,” said Mark Peikin, CEO of Bespoke Growth Partners.

Bunsen tells CNBC that while Solana is making good strides in terms of being a usable blockchain, it’s not yet decentralized enough to satisfy the larger crypto community.

It’s also not immune to bugs. Last month, Solana suffered a 17-hour outage following a denial-of-service attack, which took the form of a flood of transactions caused by bots.

The list of so-called ethereum killers is long, and includes blockchains like Matic and Polygon, which are complementary to ethereum, according to Bunsen, as well Cardano, which is known for its security.

“I think some of those ethereum killers will make it,” said Bunsen. “But they won’t kill ethereum.”

Ethereum also has its own upgrade in the works. For several years, it’s been building ethereum 2.0, which is expected to be ready by the first quarter of 2022.

The makeover will move ethereum to a less energy-intensive mining process and, according to network founder Vitalik Buterin, could boost speed by over 7,000-fold to 100,000 transactions per second.

If it’s successful, Bunsen said, ethereum 2.0 will be a “huge upgrade in terms of throughput to the ethereum network and a huge win for the environment generally.”

WATCH: Here’s what the ethereum upgrade means for ether and miners

Technology

CNBC Daily Open: SoftBank doubles down on AI amid warnings from ‘Big Short’ investor

Published

3 hours ago

November 12, 2025

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CNBC Daily Open: SoftBank doubles down on AI amid warnings from 'Big Short' investor

Jensen Huang, co-founder and chief executive officer of Nvidia Corp., left, and Masayoshi Son, chairman and chief executive officer of SoftBank Group Corp., during a fireside chat at the Nvidia AI Summit Japan in Tokyo, Japan, on Wednesday, Nov. 13, 2024.

Akio Kon | Bloomberg | Getty Images

SoftBank is selling its entire stake in Nvidia — but not for the reasons you might think.

In its earnings statement released Tuesday, the Japanese group said that it had sold 32.1 million Nvidia shares in October for $5.83 billion.

At first blush, this could be read as a sign that Nvidia’s high valuations are causing SoftBank some unease. And if SoftBank — which infamously pumped $18.5 billion into WeWork only to value it at $2.9 billion eventually — is tamping down on its usual optimism regarding its investments, then retail traders should probably pay attention.

Adding to such worries are comments by Michael Burry — who bet against subprime mortgages before they caused a whole financial crisis in 2008 — on major artificial intelligence companies.

Burry wrote Monday in a post on X that those firms are “understating depreciation” of AI chips, which “artificially boosts earnings — one of the more common frauds of the modern era.” CNBC could not independently confirm that companies were practicing this.

This doesn’t seem to be SoftBank’s concern, however. A person familiar with the group’s sale told CNBC that it had nothing to do with AI valuations. On the contrary, cash from offloading Nvidia chips will be redirected to SoftBank’s $22.5 billion investment in OpenAI, the person said.

Burry said in his post that he will reveal “more details” on Nov. 25, and exhorted readers to “stay tuned.” That might not be enough enticement for SoftBank CEO Masayoshi Son.

— CNBC’s Yun Li, April Roach and Dylan Butts contributed to this report.

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Lawmakers just released a much-awaited crypto market structure bill. Here’s what it means for digital assets and what comes next

Published

5 hours ago

November 11, 2025

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Lawmakers just released a much-awaited crypto market structure bill. Here's what it means for digital assets and what comes next

The U.S. Capitol is shown the morning after the Senate passed legislation to reopen the federal government on Nov. 11, 2025 on Capitol Hill in Washington, DC.

Win McNamee | Getty Images

The Senate Agriculture Committee has released a draft of its portion of a much-awaited digital assets market structure bill — a critical step toward accelerating institutional and retail adoption of cryptocurrencies.

Unveiled on Monday by Agriculture Chair John Boozman, R-Ark., and Sen. Cory Booker, D-N.J., the bipartisan discussion draft lays the groundwork for creating guardrails for the crypto industry in the U.S. It also establishes guidelines for institutions that want to work with digital assets, from bitcoin and ether to tokenized financial instruments.

“This is the most consequential roadmap for how an institution is going to integrate digital assets into their business,” Cody Carbone, CEO of crypto trade association Digital Chamber, told CNBC. “It’s like the best possible step-by-step of what type of compliance rules requirements they would need to follow to work with crypto.”

Here are five key takeaways from the discussion draft.

1. Grants favorable regulatory status to some cryptocurrencies

The text classifies some of the largest digital assets by market capitalization such as bitcoin and ether as “digital commodities,” placing them under the Commodity Futures Trading Commission’s purview.

This provision removes a major blocker to digital asset adoption for institutional fiduciaries, Juan Leon, an analyst at crypto-focused asset manager Bitwise, told CNBC.

“Compliance and risk departments will finally have a federal statute to point to,” Leon said. “This shifts the internal conversation … [and] it provides the legal certainty required to move assets into a formal, strategic allocation.”

It will also create “a starkly bifurcated market” consisting of regulated and unregulated tokens, with the former class of assets seeing “a massive influx of institutional capital, deep liquidity and a robust derivatives ecosystem.”

2. Requires crypto firms to segregate funds and manage conflicts of interest

The draft calls for crypto companies to “establish governance, personnel, and financial resource separation among affiliated entities that perform distinct regulated functions.”

Bitwise’s Leon interprets the provision as a challenge to the “all-in-one” business model that is common among crypto exchanges. According to those models, an exchange, broker, custodian, and proprietary trading desk are all wrapped up into one entity.

In other words, digital asset firms could be required to keep their various businesses separated like traditional financial companies, according to Leon. The change would serve as “a foundational pillar for institutional adoption.”

3. Gives the CFTC more power to regulate digital assets

The text gives more power to the CFTC, empowering it to work in tandem with the Securities and Exchange Commission to issue joint rulemaking on crypto-related matters.

“There’s a lot more power or authority delegated to the CFTC to have jurisdiction over this industry,” Carbone said.

The shift comes after the SEC for years served as the main regulator of digital assets, after it edged out the CFTC to gain authority over the industry.

4. Allows the CFTC to collect fees

The draft calls for regulated entities to pay fees to the CFTC. Those fees would go toward registering digital commodity exchanges, brokers and dealers, in addition to conducting oversight of regulated entities and carrying out education and outreach.

5. Establishes listing standards for tokens

The text calls for crypto exchanges to only permit trading of digital commodities that are “not readily susceptible to manipulation.”

It’s a provision that could reduce the number of “rug pulls” and other scams that are still common in some parts of the crypto industry, with the goal of establishing standards and building confidence in the market.

What’s next?

The Senate Agriculture Committee’s discussion draft is far from final, but it does offer critical insights into the direction of efforts to pass crypto-friendly regulations in the U.S., according to Carbone.

“It’s not final, it’s not done, but this gives a good sense of where Congress is going and what the final rules may be,” Carbone said.

The committee will likely spend the next few weeks getting feedback on their draft, meaning it may be “almost impossible to get [a final version of this part of the bill] done by the end of the year,” he added.

However, that period will give lawmakers time to offer more concrete guidance on several issues that are bracketed – or not yet finalized – in the discussion draft. Those include provisions on anti-money laundering rules and regulations specific to decentralized finance players.

Several crypto players plan to work in tandem with lawmakers to help iron out those details, among others.

“We’ve long said crypto is a bipartisan issue, and this draft from Chairman Boozman and Senator Booker reflects that,” Moonpay President Keith Grossman told CNBC. “It’s critical that legislation distinguishes between centralized intermediaries and decentralized systems, and we look forward to working with the Committee to get it right.”

The discussion draft is only one piece of larger legislative efforts to overhaul regulations for the crypto industry, according to Carbone. Ultimately, the text will be combined with the Senate Banking Committee’s draft on the digital assets market structure in a bid to create one comprehensive bill.

And although lawmakers are nowhere near the finish line in that process, crypto firms are finding other ways to work with regulators and other authorities to meaningfully advance their industry, Grayscale Investments Chief Legal Officer Craig Salm told CNBC.

“In the absence of comprehensive legislation, we’ve still seen meaningful progress on the regulatory front,” Salm said, adding that the SEC, Internal Revenue Service and Treasury Department have recently provided guidance around staking in crypto exchange-traded products. “That said, thoughtful legislation will be critical to solidifying the foundation of the digital asset industry in the U.S. and unlocking even greater value for investors and consumers.”

Technology

AMD’s Lisa Su sees 35% annual sales growth driven by ‘insatiable’ AI demand

Published

9 hours ago

November 11, 2025

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AMD's Lisa Su sees 35% annual sales growth driven by 'insatiable' AI demand

Lisa Su, chair and chief executive officer of Advanced Micro Devices Inc. (AMD), during a Bloomberg Television interview in San Francisco, California, US, on Monday, Oct. 6, 2025.

David Paul Morris | Bloomberg | Getty Images

AMD CEO Lisa Su said on Tuesday that the company’s overall revenue growth would expand to about 35% per year over the next three to five years, driven by “insatiable” demand for artificial intelligence chips.

Su said that much of that would be captured by the company’s AI data center business, which it expects to grow at about 80% per year over the same time period, on track to hit tens of billions of dollars of sales by 2027.

“This is what we see as our potential given the customer traction, both with the announced customers, as well as customers that are currently working very closely with us,” Su told analysts.

Ultimately, Su said that AMD could be able to achieve “double-digit” share in the data center AI chip market over the next three to five years.

AMD shares fell 3% in extended trading.

The AI chip market is currently dominated by Nvidia, which has over 90% of the market share, according to some estimates, and which has given the company a market cap of over $4.6 trillion, versus AMD’s roughly $387 billion valuation.

AMD is holding its first financial analyst day since 2022, as the company has found itself at the center of a boom in data center spending for AI.

While companies are spending hundreds of billions of dollars in total on graphics processing unit (GPU) chips to build and power artificial intelligence applications like OpenAI’s ChatGPT, they are also looking for alternatives to increase capacity and control costs. AMD is the only other major developer of GPUs aside from Nvidia.

In October, AMD announced a partnership with OpenAI in which it would sell the AI startup billions of dollars in its Instinct AI chips over multiple years, starting with enough chips in 2026 to use 1 gigawatt of power.

As part of the deal, OpenAI could end up taking a 10% stake in the chipmaker. Su also highlighted long-term deals with Oracle and Meta on Tuesday.

AMD shares have nearly doubled so far in 2025.