Analysis

Players Rejoice as Crypto Winter Tanks GPU Costs

Key Takeaways

  • Excessive-end graphics processing models (GPUs) have tanked in worth on the secondary market over the previous six months. 
  • The falling value of Ethereum and its upcoming change away from Proof-of-Work have contributed to the decreased demand.
  • Rising power prices have additionally harm miner profitability, leading to many miners promoting their graphics playing cards to recoup prices.

The declining crypto market has triggered costs for graphics playing cards on the secondary market to plummet. 

GPUs Come Again All the way down to Earth

Graphics playing cards have gotten extra reasonably priced for his or her supposed function.

Excessive-end graphics processing models (GPUs), popularly used for mining Proof-of-Work cryptocurrencies equivalent to Ethereum, have plummeted in worth on the secondary market over the previous six months. 

In keeping with accomplished listings knowledge compiled from eBay, the newest fashions from Nvidia’s RTX 3000 collection and AMD’s 6000 collection have seen their costs drop 50% for the reason that begin of the yr. In January, an RTX 3060ti, one of the vital environment friendly consumer-grade playing cards for mining Ethereum, usually set patrons again upwards of $1,000. Now, the identical card trades arms on eBay for round $492.

Secondary gross sales of different playing cards present related traits. Nvidia RTX 3070s and AMD RX 6800 XTs have additionally registered over 50% declines in latest months. Moreover, extra highly effective playing cards, such because the RTX 3080 and 3090 fashions, present bigger reductions in comparison with their extra mining-efficient counterparts. The RTX 3090, till not too long ago essentially the most highly effective card within the RTX collection, has seen essentially the most vital value drop, beforehand promoting for as much as $2,788 in January, right down to a median of $1,106 in the present day. 

RTX 3090 common offered value chart (Supply: eBay)

The upper decline within the costs of the RTX 3080 and 3090 fashions suggests these playing cards could have been promoting at an extra premium unconnected to their use in crypto mining. Whereas demand from crypto miners has contributed to graphics card value rises over the previous two years, scalpers making the most of semiconductor provide points brought on by COVID-19 lockdowns are additionally chargeable for much less mining-efficient graphics playing cards buying and selling at exorbitant costs. 

Graphics playing cards are an integral part in private computer systems that convert code into photos that may be displayed on a monitor. Whereas high-end GPUs let players play standard titles in excessive element with superior results, the processors that render these top quality graphics are additionally efficient in fixing the complicated equations wanted to mine some cryptocurrencies. Because the crypto market roared to new highs in late 2020, demand for graphics card soared. On the top of mining profitability in 2021, playing cards purchased at major sale retail value might be paid off after round three months of Ethereum mining.

Now, falling crypto costs, and thus mining profitability, has offered reduction to the GPU market. Ethereum, the second-largest cryptocurrency behind Bitcoin, has persistently been the most well-liked coin to mine utilizing consumer-grade GPUs. Because the begin of the yr, Ethereum has nosedived from over $3,600 to only over $1,000, representing a drop in worth of greater than 70%. 


ETH/USD year-to-date chart (Supply: CoinMarketCap)

Ethereum Merge Slashes GPU Demand

Moreover, Ethereum will quickly change from a Proof-of-Work to a Proof-of-Stake consensus mechanism in a long-awaited improve dubbed “the Merge.” It will carry an finish to utilizing GPUs to validate the community, changing energy-hungry computations with a greener coin staking mechanism. The change to staking is estimated to scale back Ethereum’s carbon footprint 100-fold whereas decreasing coin emissions by round 90%. 

With the Merge anticipated to happen later this yr, many Ethereum miners are slowing down their operations in preparation. Whereas some miners have introduced plans to modify to different cryptocurrencies equivalent to Ethereum Basic or use their GPUs for on-demand video rendering post-Merge, there’s no assure these actions will probably be as worthwhile as mining Ethereum—if in any respect. These mining in the present day will seemingly be apprehensive about shopping for extra graphics playing cards with an unsure future forward. 

One last difficulty contributing to falling GPU costs is the growing value of power globally. The World Financial institution Group’s power value index exhibits a 26.3% value improve between January and April 2022, including to a 50% improve between January 2020 and December 2021. With power costs surging, extra miners will wrestle to eke out a revenue—particularly smaller dwelling miners who pay home electrical energy charges. A mix of rising power prices and plummeting crypto costs has seemingly made it uneconomical for a lot of hobbyists to proceed mining. As those that resolve to unplug their rigs promote their playing cards to recoup prices, pushing lower because of the improve in provide. 

Whereas GPU costs have dropped from the jacked-up costs customers have come to count on over the previous two years, there might be scope for them to drop additional. Semiconductor shortages mixed with extreme demand triggered GPU makers to up their retail costs to fall extra consistent with secondary market gross sales. Nevertheless, the latest inflow of used playing cards on marketplaces like eBay has introduced the going fee down effectively under major sale retail costs. If producers like Nvidia and AMD wish to proceed promoting new models, they face adjusting their costs to compensate for secondary market provide. This isn’t the primary time producers have been hit—in 2019, Nvidia reported disappointing gross sales of its then-new 2000 collection playing cards, which the corporate blamed on second-hand GPUs flooding the market after the mining increase through the 2017 crypto bull run. 

With Ethereum transferring away from Proof-of-Work mining and crypto costs settling right into a bear market, graphics card costs are lastly returning to regular. Nonetheless, if one other Proof-of-Work coin takes off sooner or later, GPUs might as soon as once more grow to be a scorching commodity. 

Disclosure: On the time of penning this piece, the writer owned ETH and several other different cryptocurrencies. 

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