Despite losing some $44 billion as the year opened, the current market cap for cryptocurrencies is fast approaching the trillion mark. Because of this growth, the demand for cryptocurrency mining hardware has reached record-high levels, affecting other industries that need the same equipment.
Traditionally, the pricing index for graphics processing units (GPUs) made by companies like AMD and Nvidia are relative to the demand from one of its primary consumers: gamers, and the whole industry of professional eSports built around it. Recently, however, there has been an increased demand for hardware components like GPU, which has been attributed to the rising cryptocurrency mining industry.
These changes in the GPU market has resulted in supply shortages. Gamers looking to build their rigs with mid-range or high-end graphics card now have a harder time to set up their gaming machines.
Small cryptocurrency mining enthusiasts actively buying the hardware in bulk in hopes of improving their passive profits are often pointed as the culprits. While some crypto-mining companies like Bitmain have shifted to creating dedicated processors like ASICs (application-specific integrated circuit chips) mining units, there are cryptocurrencies that have differing algorithms which may still make use of current GPUs in the market and continue to mine profitably.
These significant changes in pricing have affected gamers negatively. As hardware enthusiasts, gamers are often keen as to what kind of GPUs are set to run their graphics-intensive games. Specifications matter most, and the capabilities of a GPU determine what a gamer may or may not be able to play.
In a report by Polygon, it has been noted that the average pricing for Nvidia’s GeForce GTX 1070, a higher-tier mid-range GPU, has soared past $700 because of stock shortages. Such an increase is 80% more than the typical price range, even with retailer repricings taken into account. With GPU brands such as Galax, Asus, EVGA, MSI, Gigabtye, Zotac, and Palit all competing in the market, gamers now also have to compete with cryptocurrency miners looking to purchase powerful GPUs.
Because crypto mining hardware with algorithms adjusted specifically for GPUs instead of CPU compete by solving the mathematical problems needed to verify transactions on a blockchain, better power efficiency and higher hashrates create more returns and profitability.
As the difficulty of a cryptocurrency adjusts in relation to the current height of blocks mined, the supply of a certain cryptocurrency also dwindles. Miners are then compelled to adjust their own hardware capacity in order to stay competitive and profit from their efforts. To date, cryptocurrencies using encryption algorithms such as SHA-256 (Bitcoin Cash), Scrypt (Litecoin, Dogecoin, etc.), and X11 (Dash) can still profit from using GPUs as mining hardware.
Gamers are taking the toll, with the impact of the demand in GPUs adversely raising prices for mid-range cards like the Nvidia GTX 1060 or GTX 1070, or AMD’s Radeon RX 570, 580, Vega56, and Vega 64 cards. Higher-specced cards like the GTX 1080 or even the top-end Ryzen series from AMD have also been affected by the demand surge.
To curb this, Nvidia has advised its retail partners to prioritize sales for gamers over miners, in an attempt to pacify its gaming-oriented consumer base. However, retailers are less likely to follow this notice, given how the margins provided by sales to miners are significantly higher than those from the gaming crowd. This trend has resulted in the introduction of new policies and offers from retailers such as purchase limits for a specific model and bundled discounts for gamers who buy GPUs with other hardware components.
The push for mining companies andmining pools to verify more blocks has reached an unprecedented proportion of competitiveness, one that can be observed particularly with the legacy bitcoin, or SegWit1x (BTC), network which has been noted to have serious effects to the environment. More sensible cryptocurrencies such as Bitcoin Cash have since attracted investments for environmentally-sustainable mining infrastructures to be built. As the crypto industry heads into a new phase of development following the maturity of its software, networks at the forefront of its global adoption and growth should take responsibility over the adverse effects of its mining hardware requirements.