The IOHK company’s project, the Cardano blockchain just saw its token, ADA reach a new all-time high surpassing $2 on Coinbase Pro. The surge in the coin comes amidst a bearish market following the news of Tesla suspending its bitcoin payment option as a result of energy concerns.
Why the surge in ADA?
The major cause of the recent price surge in ADA is the long-anticipated launch of the “Alonzo Testnet.” Cardano is going fully into the smart contract space and aims to compete with the number one smart contract cryptocurrency network, Ethereum. Although the Testnet has not launched, its ecosystem system is growing exponentially with several listings as seen in the image below.
These companies have already listed on the Cardano smart contract platform and are ready to do business as soon as it opens up sometime in May 2021. The Alonzo Testnet promises to solve the shortcomings of the Ethereum network especially in the area of gas fees (Transaction fees). Today, investors are paying through the roof on gas fees on the Ethereum network with investors paying as high as $700 in gas fees as a result of high network congestion. When the Cardano Testnet launches, it will be no surprise if investors migrate from the congested Ethereum network to the Cardano blockchain.
Another reason for the raise is energy consumption. Due to the recent suspension of bitcoin as a payment method by Tesla owing to its high energy consumption, CEO Elon Musk mentioned that the company will be looking for a cryptocurrency that consumes less than 1% of bitcoin’s energy consumption. The cryptocurrency that the electric car company would most likely use going forward may as well be ADA. Recent reports by TRG Datacenters shows that ADA consumes 0.5479 kWh per transaction, compared to bitcoin which consumes 707 Kwh per transaction. This makes ADA a likely cryptocurrency choice for Tesla.
In the light of these, ADA looks set to become a force in the cryptocurrency world. Lending more credence to this assumption is the recent partnership the IOHK company has secured with East African country, Tanzania’s ministry of education. Its current return on investment YtD is 750% and it is currently ranked number 4 by market capitalization.