- High-end graphics processing units (GPUs) have tanked in value on the secondary market over the past six months.
- The falling price of Ethereum and its upcoming switch away from Proof-of-Work have contributed to the decreased demand.
- Rising energy costs have also hurt miner profitability, resulting in many miners selling their graphics cards to recoup costs.
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The declining crypto market has caused prices for graphics cards on the secondary market to plummet.
GPUs Come Back Down to Earth
Graphics cards are becoming more affordable for their intended purpose.
High-end graphics processing units (GPUs), popularly used for mining Proof-of-Work cryptocurrencies such as Ethereum, have plummeted in value on the secondary market over the past six months.
According to completed listings data compiled from eBay, the latest models from Nvidia’s RTX 3000 series and AMD’s 6000 series have seen their prices drop 50% since the start of the year. In January, an RTX 3060ti, one of the most efficient consumer-grade cards for mining Ethereum, typically set buyers back upwards of $1,000. Now, the same card trades hands on eBay for around $492.
Other cards’ secondary sales exhibit comparable patterns. In recent months, Nvidia RTX 3070 and AMD RX 6800 XT cards have both experienced price drops of more than 50%. Furthermore, more potent cards, like the RTX 3080 and 3090 models, have greater reductions in comparison to their more effective competitors. The most substantial price decline has been experienced by the RTX 3090, which was previously the most potent card in the RTX series. Its price dropped from up to $2,788 in January to an average of $1,106 today.
The higher decline in the prices of the RTX 3080 and 3090 models suggests these cards may have been selling at an additional premium unconnected to their use in crypto mining. While demand from crypto miners has contributed to graphics card price rises over the past two years, scalpers taking advantage of semiconductor supply issues caused by COVID-19 lockdowns are also responsible for less mining-efficient graphics cards trading at exorbitant prices.
In order to translate computer code into images that can be viewed on a monitor, graphics cards are a crucial component. High-end GPUs enable players to play well-known games in great detail and with cutting-edge effects, but the processors that produce these high quality visuals are also proficient at solving the difficult equations required for some cryptocurrencies’ cryptocurrency mining. Demand for graphics cards skyrocketed in late 2020 as the cryptocurrency market roared to new highs. Cards purchased at the main sale retail price in 2021 may be repaid after around three months of Ethereum mining, when mining would be at its most profitable.
The GPU market is now seeing some respite as a result of declining cryptocurrency prices and mining profitability. The most popular cryptocurrency to mine with consumer-grade GPUs has consistently been Ethereum, the second-largest cryptocurrency after Bitcoin. Since the beginning of the year, Ethereum’s value has plummeted from over $3,600 to just over $1,000, a decline of more than 70%.
ETH/USD year-to-date chart (Source: CoinMarketCap)
Ethereum Merge Slashes GPU Demand
Additionally, Ethereum will soon switch from a Proof-of-Work to a Proof-of-Stake consensus mechanism in a long-awaited upgrade dubbed “the Merge.” This will bring an end to using GPUs to validate the network, replacing energy-hungry computations with a greener coin staking mechanism. The switch to staking is estimated to reduce Ethereum’s carbon footprint 100-fold while reducing coin emissions by around 90%.
With the Merge expected to occur later this year, many Ethereum miners are slowing down their operations in preparation. While some miners have announced plans to switch to other cryptocurrencies such as Ethereum Classic or use their GPUs for on-demand video rendering post-Merge, there’s no guarantee these activities will be as profitable as mining Ethereum—if at all. Those mining today will likely be apprehensive about buying more graphics cards with an uncertain future ahead.
One final issue contributing to falling GPU prices is the increasing cost of energy globally. The World Bank Group’s energy price index shows a 26.3% price increase between January and April 2022, adding to a 50% increase between January 2020 and December 2021.
More miners will find it difficult to turn a profit as a result of rising energy costs, especially smaller home miners who pay domestic electricity rates. It’s likely becoming unprofitable for many enthusiasts to continue mining due to growing energy bills and falling cryptocurrency values. As people choose to unplug their rigs, they sell their cards to recoup costs, which causes prices to fall as a result of the increased availability.
Although GPU prices have decreased from the exorbitant amounts consumers had grown to expect over the last two years, there may yet be room for further decreases. Due to a lack of semiconductors and high demand, GPU manufacturers had to raise their retail pricing to make them more in line with secondary market sales. The going rate has, however, dropped significantly below main sale retail prices as a result of the recent surge of used cards on online markets like eBay. Manufacturers like Nvidia and AMD will need to raise their prices to account for the supply on the secondary market if they want to keep selling new products.
This isn’t the first time manufacturers have been hit—in 2019, Nvidia reported disappointing sales of its then-new 2000 series cards, which the company blamed on second-hand GPUs flooding the market after the mining boom during the 2017 crypto bull run.
With Ethereum moving away from Proof-of-Work mining and crypto prices settling into a bear market, graphics card prices are finally returning to normal. Still, if another Proof-of-Work coin takes off in the future, GPUs could once again become a hot commodity.
Disclosure: At the time of writing this piece, the author owned ETH and several other cryptocurrencies.