End of Ethereum mining could be a boon for GPU buyers

End of Ethereum mining could be a boon for GPU buyers
End of Ethereum mining could be a boon for GPU buyers

Although these GPUs were liquidated following the 2018 floods in China, they provide a good visual for the flood of GPUs hitting used markets these days.

For most of the world, yesterday’s long-awaited Ethereum “merger” – which shifted the cryptocurrency from a proof-of-work mining to a proof-of-stake model – is notable for reducing the consumption of cryptocurrencies. energy of 99.95%. But for gamers, the merger has already contributed to a sea change in the GPU market and could continue to drive graphics card prices down in the future.

In recent years, crypto miners have scooped up as many GPUs as possible to power their mining rigs, leading to supply shortages and heavily inflated prices for consumers who simply wanted better graphics on their PC games. . This trend seems to have reversed at the end of 2021, however, as the dollar-denominated prices of most cryptocurrencies began a long slide that made GPU mining unprofitable in many areas.

GPU prices have already fallen throughout 2022, causing GPUs to routinely cost much less than their MSRP on auction sites like eBay. GPU makers found themselves with an unexpected surplus of excess inventory.

Last month, Nvidia announced preliminary results suggesting weaker-than-expected demand for its high-end cards. “Changes to cryptocurrency standards and processes, including but not limited to the pending Ethereum 2.0 standard, may also create increased resales of our GPUs in the secondary market and reduce demand for our new GPUs,” the company said.

Nowhere to run, baby

You might think that Ethereum miners could just switch to other cryptocurrencies that still rely on proof-of-work mining (including Bitcoin, which is still the largest cryptocurrency by market capitalization). The forked Ethereum Classic, which sticks to the original proof-of-work model of the token, has emerged as an alternative trying to fill exactly that role.

But a recent report revealed that before the merger, Ethereum was responsible for 20-39% of crypto-asset electricity consumption. It’s such a big chunk of the crypto-mining space that all those miners moving en masse to other tokens would quickly lead to a glut in the compute supply. This in turn would cause yields to decline rapidly to the point where only miners with extremely cheap electricity could make a profit.

We already see this cycle playing out on Ethereum Classic. As miners started flocking to the post-merger fork, the increased supply of computing power has


Enlarge / The Ethereum network’s total hashrate has been declining for months, suggesting that some miners may have exited long before the merger.

Luxor COO Ethan Vera told The Block that only around 100 TH/s of Ethereum’s mining capacity would be able to “find a home” on other proof-of-work tokens afterward. fusion. That leaves around 90% of the previous Ethereum mining network that “will basically have no use for GPUs in crypto mining” post-merger, Vera said.

“GPU mining died less than 24 hours after the merger”, Ben Gagnon, Chief Mining Officer of Bitfarms

. “The only coins that generate profits have no market capitalization or liquidity. The benefit is not real.”

. end mining ethereum could be a bargain for buyers GPU

. Ethereum mining boon GPU buyers

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