Both veteran miners and novices looking to make a quick buck have jumped aboard the hype train, and thousands of people have seized this virtual gold rush in the hope of making large profits. Unfortunately, this sudden surge in popularity and value has brought a rather hefty price with it- it has had an undeniably severe impact on the consumer graphics card market. Massive shortages of certain graphics cards, absurd inflation in pricing and drastic measures such as two-per-household limits on graphics card orders are proof that the rage over mining is having a chaotic effect on the graphics card market.
What is cryptocurrency mining?
A cryptocurrency is a digital currency that uses cryptography to secure transactions and generate additional units. Cryptocurrency is often decentralised and is not regulated and their worth is dictated by supply and demand, making it a fairer, more sensible currency. Furthermore, it is difficult to counterfeit due to the nature of the secure cryptography algorithm; which is why many people have embraced cryptocurrency. Aside from the standard method of acquiring currency via conversion, the most popular method of acquiring cryptocurrency is through mining – solving complex cryptographic math problems that help transactions to be processed and the cryptocurrency network to run effectively.
Where do graphics cards come into this? Well, powerful graphics cards are extremely effective at mining hashes for cryptocurrencies, as they can tackle a large number of mathematical formulae at much higher speeds than CPUs. This equates to faster, more effective mining (albeit at the cost of high power consumption, heat generation and rapid wear). Therefore, those who are serious about cashing in on cryptocurrencies invest in mining rigs that house several GPUs for maximum long-term profit.
How is this harming the GPU market?
The rise of a new cryptocurrency like Ethereum means more people are willing to buy graphics cards en-masse to create large mining rigs, or even mining farms made up of hundreds of graphics cards. The surge in demand has led to inflation in graphics card pricing, and large supply shortages. These often depend heavily upon the profitability of the currency, as more profitable currencies generate much more demand for graphics cards.
As we are seeing now with the massively popular ETH, and as we saw in 2013 with Bitcoin, a highly profitable currency can lead to worldwide shortages in graphics cards and price increases of 2x-3x MSRP. This is most visible across mid-range cards, as buying multiple mid-range cards is often more profitable than spending more on top-end GPUs (and the GDDR5X memory used on Nvidia's GTX 1080 and 1080Ti is incompatible with mining). Furthermore, while the impact of the mining craze was initially limited to Team Red (as AMD's GPU architecture was more effective for quick mining), it has begun to spill over to the Nvidia side of the market – shortages of the GTX 1060 and price increases of both the low-end 1050TI and the mid-high end GTX 1070 are becoming prevalent.
In addition to the above, as the currency stabilises and stops being as profitable as before, chips designed for a certain type of mining (such as ASICs) enter the market, or cryptocurrencies move towards a proof-of-stake model, miners start selling these cards on eBay or other sites in large numbers. This harms manufacturers as it cuts into the sales of newer product lines; as well as consumers, as mining cards are often subject to extreme wear, as mentioned above. This means they're unlikely to reach peak performance like they would have when new, their thermal performance may be sub-par, and they may be more prone to issues, faults, and failures.
In other words, mining is bleeding the market dry, and it's hurting everyone.
What can be done about it?
From the consumer side of things, not much. The enormous, meteoric rise of demand for graphics cards was completely unprecedented- as is often the case with volatile cryptocurrencies. Back in 2013, when Bitcoin caused mass graphics card shortages, mining-specific hardware options such as ASIC chips (as mentioned above) began to enter the market, as well as mining-specific options from graphics card manufacturers such as ASUS and EVGA. These options decreased the viability or benefit of mining using consumer GPUs, meaning miners shifted away from them and the market recovered. However, while an older currency like Bitcoin has speciality hardware available due to its age, newer options like Ethereum today are currently best suited to consumer GPUs. Therefore, the market bleeds once again as a result of mining.
What is being done about it?
Manufacturers are attempting to soften the blow by once again introducing mining-specific variants of cards that are already popular amongst miners, such this ASUS Mining RX-470. However, the performance impact of these on mining is yet to be measured, meaning so far, their impact on the consumer graphics card shortage has been limited. Don't throw your half-completed build in despair though, as all hope is not yet lost. AMD has piloted an interesting and innovative solution to this problem with the distribution of their RX Vega series of graphics cards. They are, for a limited time, not selling the cards individually – instead, they are selling them in what they are calling "Radeon packs", selling the cards exclusively as a part of a package that offers free games and steep discounts on Ryzen CPUs, x370 motherboards and Samsung FreeSync monitors; for $100 more than MSRP. It's a creative way to prevent miners hoarding cards, and undoubtedly provides great value for existing gamers, as well as those entering the enthusiast sector who are building new systems. While they may not be for everyone (and AMD needs to actually shift the cards to retailers in order to sell them), they definitely display that manufacturers are recognising the problem and taking pragmatic steps to intervene, for everyone's sake.
The mining fad is making it impossible to buy a new graphics card at the moment. While supplies have recovered, ridiculous price oscillations are still present months after the initial boom in Ethereum, and it's frustrating gamers, manufacturers, and resellers alike all over the world. However, AMD's Radeon packs present a creative solution to this crisis, allowing gamers to access powerful graphics cards with great value deals; especially so for those building new systems. And as more specialised mining hardware hits the market, it's safe to say that the demand on the graphics card market will ease and that prices will return to normal soon.
But what do you think? How long will this crisis last? Will AMD's new distribution strategy help soften the blows on the market? Drop a comment below and let us know what you think.
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