Spot Bitcoin (BTC) exchange-traded funds (ETFs) could “completely destroy” Bitcoin if they are too successful, warns the former CEO of BitMEX.

Hayes — who co-founded cryptocurrency exchange BitMEX in 2014 — explained in a Dec. 23 blog post that Bitcoin has value because “it moves.”

"Expression" is my last article of 2024. I offer some thoughts on expressions of the #crypto investment theme that will ultimately prove to be worthless.

May the Pump be with you!https://t.co/bG4ZnSjYu5 pic.twitter.com/nbru6yZlJD — Arthur Hayes (@CryptoHayes) December 23, 2023

However, spot Bitcoin ETFs are made to “vacuum up assets” and “store them in a metaphorical vault," he said.

If Bitcoin ETF issuers end up holding all of the Bitcoin, and investors end up buying Bitcoin derivatives rather than HODLing themselves — the number of transactions on the network will dry up, and miners will lose any incentive to keep validating transactions.

“The end result is miners turn off their machines as they can no longer pay for the energy required to run them," said Hayes. "Without the miners, the network dies, and Bitcoin vanishes."

“Fundamentally, if ETFs managed by TradFi asset managers are too successful, they will completely destroy Bitcoin."

New Arthur Hayes article dropped. ETFs could kill bitcoin.

The price of bitcoin is unlikely to keep increasing enough to sustain miners alone. This has always been the case but the remedy was that transaction fees would provide miners the revenue. pic.twitter.com/rn7V5hEv2F — HellB (@Crypto_Hellboy) December 24, 2023

Interestingly, Hayes imagined that should such a scenario unfold, a new cryptocurrency monetary network would take Bitcoin’s place and even expand upon Satoshi Nakamoto’s original vision of peer-to-peer electronic money.

“It is beautiful when you think about it. If Bitcoin becomes just another state-controlled financial asset, it dies because it isn’t used.”

“The people will once again have a non-state-controlled monetary asset and financial system. Hopefully, the second time around, we will learn not to hand our private keys to [Wall Street firms].”

Related: Spot Bitcoin ETF approval to propel BTC to $1M in ‘days to weeks,’ says Samson Mow

Hayes’ Bitcoin musings come just two weeks before the anticipated approval of all pending spot Bitcoin ETF applications, which Bloomberg analysts expect to occur between Jan. 5 and Jan. 10, 2024.

BlackRock, Grayscale, Bitwise, WisdomTree, Invesco and Galaxy, Fidelity, Ark Invest, Valkyrie, Franklin, Hashdex, Global X ETFs and Pando Asset are all waiting for a decision by the SEC over their spot Bitcoin ETF applications.