If you have any investments in popular cryptocurrencies, chances are you’ve had a pretty unpleasant few weeks. While most of the news surrounding the current cryptocurrency market crash concerns Bitcoin, its collapse has also dragged down several other coins like Ethereum.
At its peak, a single Bitcoin was worth nearly $64,400, which means that if you bought $1,000 worth of Bitcoin on November 12, 2021, it would currently be worth around $326 today. Likewise, the price of Ethereum has dropped to $1,112 this week, down from $4,600 in November, and that was the main currency still being mined using consumer graphics cards rather than application-specific integrated circuit (ASIC) miners. ).
This is bad news for cryptocurrencies, but potentially good news for other stakeholders who are praying for the market to go down, even if some people have nothing to gain from the Bitcoin crash. One such group is PC gamers and computer enthusiasts who have partially blamed cryptocurrency miners for the rapid inflation of graphics card prices in recent years – but will this continued market collapse provide a fruitful bounty of cheap GPUs?
It’s certainly a possibility, but not everything is black and white. Bitcoin itself has not been a real issue for the gaming community for years as it is completely unfeasible to mine using a consumer graphics card. Smaller cryptocurrencies have not had this problem, but the fame and popularity of Bitcoins seems to have dragged many of these smaller coins with it.
12-18 months ago, when I was reporting the rising cost of recently released GPUs like the Nvidia GeForce RTX 3080, prices went up to almost 3x the MSRP for some of the most popular next-gen offerings from AMD and Nvidia, which made the boards impossible to find in stock and extremely inaccessible to most. Part of the blame was placed on cryptocurrency miners, from small-scale operations to large industrial farms, as they had the power to purchase all available stock from online stores using bots.
Covid-19 added additional frustrations as physical stores remained closed for many months, which forced potential customers to try to get new GPUs online, either from a retailer directly or by paying scalpers on third-party sites such as eBay or Facebook Market.
Wait, so cryptocurrency miners are to blame?
PC gamers and creators had an understandably depressing few months where it looked like prices wouldn’t go down and shortages were inevitable. Looking at the general “vibe” during this time, I was getting very tired of hearing about new graphics cards being released because few consumers were able to afford them at a reasonable price. Not surprisingly, there were people waiting for the cryptocurrency market to crash – even if it was more out of spite than a belief that it would fix the market.
Cryptocurrency miners certainly did not pose the biggest problem, but they caused competition for the little available stock. In the end, Team Green (Nvidia) implemented measures to make its consumer graphics cards less desirable for those hoping to use them to mine coins like Ethereum by installing anti-mining technology on nearly the entire Ampere lineup.
The fact is, the GPU market has been slowly recovering for months now, and the current crash likely has only a small part to play in that.
Asus announced during the company’s Q1 earnings call that the drop in demand was likely caused by the cryptocurrency industry’s intention to move away from GPU-based mining to Ethereum, the world’s second most popular cryptocurrency behind Bitcoin.
This is because Ethereum has started migrating to proof-of-stake, from the previous proof-of-work method previously used by Bitcoin. In simple terms, proof of work is a validation method where computers compete with each other to be the first to solve complex “puzzles” and the winner gets to update the blockchain with the latest verified transactions, being rewarded with some cryptocurrencies like payment .
This left validation open to miners using warehouses full of consumer graphics cards to solve these puzzles – massive amounts of electricity go in and cryptocurrency goes out.
Proof of stake uses validators to find a block based on the number of tokens they have, which eliminates the need to solve these “puzzles”. So while it was previously profitable to mine Ethereum on consumer graphics cards, it will soon be inefficient to do so.
Not only does the crash mean that people will make less money if they continue to mine, it can also result in some people abandoning mining altogether and selling large amounts of hardware to recoup some money. We could expect an influx of cheap, used graphics cards to flood the market, although you have to buy them at your own risk considering how long they’ve been in constant use.
Still, even without used GPUs flooding sites like eBay or Facebook Marketplace, we can expect PC gamers to find less competition from crypto miners in the coming months, which should make it easier to grab the GeForce RTX 3060 you’ve been eyeing.
Rejoice but be aware that our fortunes can change
We’re already seeing some of the current generations of graphics cards being sold at a discount to newer ones, although using the word “already” might rub salt in some sores as many of these cards are approaching their second birthday.
We’re just a few months away from seeing what AMD and Nvidia have to offer in terms of next-gen hardware, and Intel is already testing its desktop GPUs in the Chinese market. Arc Alchemist will be a generation behind Lovelace and RDNA3 when it launches, but its inclusion could help prevent a shortage.
All of this certainly sounds good to… well, anyone who isn’t a cryptocurrency miner. With the cryptocurrency tank, there will be less competition from miners jumping into the next-gen launch, as well as cheap used hardware for those on a tight budget. The biggest risk here is that there are still other coins available that use a proof-of-work system, so even when ETH eventually moves away from proof-of-work, mining could become profitable again if the cryptocurrency market recovers.
For now, it looks like PC gamers and builders can celebrate a victory over what many considered a significant thorn in their side. Cryptocurrency markets can recover, of course, but we can at least take advantage of some discounted graphics cards before the possible recovery.