Ethereum miners have reportedly bought $15 billion worth of GPUs in the last eighteen months. Add to this the prices of other components of their mining rig (CPUs, power supplies, chassis), the amount spent on hardware for mining Ethereum worldwide seems even more impressive. Miners may have consumed about 10% of the discrete GPU supply over the past eighteen months. This mining boom and consequent hoarding of GPUs coincided with player demand, contributing to a sharp price increase.
As the tech industry has faced an unprecedented shortage of semiconductors for more than two years, Ethereum miners’ spending on GPUs continues to rise. Analytics firm Bitpro Consulting recently published an estimate of this spending, which only considers purchases over the last two years. On average, a GPU cost $1,056 per unit in 2021, compared to just a third of that price in 2019. Analysts reported earlier this year that full-year 2021 GPU sales will be around $51.8 billion -dollars totaled.
According to the Bitpro Consulting report, it appears that Ethereum miners have taken over about 10% of the total GPU supply during the cryptocurrency bubble of the last two years. When Ethereum price surged in October-November 2020, millions of people started mining Ethereum coins to make easy money. They used retail-bought graphics cards, and their purchases coincided with skyrocketing gamer demand as AMD and Nvidia released highly competitive Radeon RX 6000 and GeForce RTX 30 cards in late 2020.
Demand from players and miners exceeded supply, causing prices to skyrocket. Because of this, GPU average selling prices, already high in late 2020 due to the PC gaming boom during the Covid-19 pandemic, have reached unprecedented levels. According to a GPU price trends report, in Q1 2021, a high-end graphics card with a manufacturer’s suggested retail price (MSRP) of $649 or more was priced at an average of $1,358, while the average retail price for a lower-tier GPU was $1,062.
Based on the approximate average price of a graphics card in 2021 and the amount miners spent on GPUs, Bitpro Consulting estimates that from Q4 2020 to the end of Q1 2022, Ethereum miners consumed approximately 14.2 GPUs. However, the analysis The company adds that this amount is not entirely correct, as some miners used special cards (not counted in the report) for Ethereum mining, while others used gaming laptops for mining. The actual number of GPUs used by mining farms could therefore be different.
However, the report notes that the $14.2 million figure is significant as Ethereum mining has thrived in six quarters. In fact, approximately 73.55 million discrete desktop GPUs were reportedly shipped from Q4 2020 to Q1 2022. Considering that the standalone GPU market today is roughly evenly split between desktops and laptops, it looks like Ethereum will account for about 10% of the total GPU market between Q4 2020 and the end of Q1 2022. production consumed.
However, according to Bitpro Consulting, it is even more difficult to quantify the number of GPUs used for both gaming and mining. Ethereum’s value has fallen 70% this year and analysts say it’s unlikely anyone will buy a bunch of new graphics cards to mine Ethereum. People who bought their charts and platforms early enough would likely have made big profits when Ethereum was at its peak. But those who started mining last year could wait months or even years to recoup their investment.
Additionally, analysts are pointing out that the Bitcoin price plunge should also support the drop in GPU prices. Recent reports have revealed that new and used graphics card prices are continuing to fall after their price spikes in late 2021 and early 2022. It would now be possible to buy the latest generation GPUs at prices that would have seemed bargain-buy six months ago or a year ago. Mid-range Nvidia GeForce RTX 3000-series GPUs would still sell at MSRP or slightly above. The prices for used GPUs should also drop steadily.
eBay prices for used GPUs reportedly fell by an average of 10% between June 1st and June 15th as some cryptocurrency miners sought to cut their losses by selling their hardware. This is said to be happening even as mining software begins to find ways to bypass Nvidia’s hash rate-limiting LHR protection. Eventually, used GPUs could get even cheaper as Bitcoin and Ethereum mining become less profitable.
Mining has become less profitable due to a significant drop in Bitcoin price in recent months. It might even be unprofitable for some bitcoin miners right now,” cryptocurrency analysis platform CryptoRank said in a recent report. On the Ethereum side, mining profitability has declined due to the shift from proof-of-work algorithm to proof-of-stake algorithm.
The shift from proof-of-work to proof-of-stake will greatly reduce power consumption and abandon some expensive technologies to find new uses. This should increase the number of used GPUs available on the market.
What is your opinion on the topic?
What do you think of the GPU spend from Ethereum miners over the past two years?
What do you think of the gradual decline in GPU prices?
What other factors do you think could drive GPU prices down?
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