We all know there is a shortage of graphics cards at the moment. The blame for the empty shelves is often assigned to anything from a lot of indoor time and gaming during the pandemic, or to scalping – ie. purchases for more expensive resale, and the “mining” of cryptocurrency.
It has proven difficult to document what share of available cards the crypto miners suck up. That question may now have been settled. Jon Peddie Research has a new report out, estimating that about 25 percent of the graphics card market ended up being used for crypto-mining in the first quarter of this year.
To put the actual numbers out there, it means that during the first three months of the year, miners sucked some 700,000 mid- and top range graphics cards off the market, with a value of more than $500 million!
The report points out that Ethereum is constantly being mined with graphics cards as the preferred tool, where other currencies such as Bitcoin are mined with specialized hardware – typically ASICs, processors made exclusively for this one special purpose, instead of general processors like regular CPUs or GPUs.
Towards the end of the year, it is likely that Ethereum – which accounts for most of the mining market – will no longer be recoverable with graphics cards. By then Ethereum will go from so-called Proof of Work, where you validate transactions by mining and graphics cards, to Proof of Stake. Here, transactions are validated based on how much Ethereum some people “lock” and make available to the network.
This transition is normally referred to as Ethereum 2.0 and will lead to far less energy consumption from the network. It will lead to millions of miners, both professionals and hobby miners with one or more graphics cards, seeking out new cryptocurrencies to extract.
As of today, there are no networks large enough to absorb the amount of computing power that has been active for Ethereum mining, and return-of-investment for miners will likely drop sharply.
To arrive at the proportion of cards having ended up in the crypto industry, Jon Peddie Research has looked at the number of additional cards sold compared to the number of PCs in the market. This share has increased sharply in waves, which corresponds to an increased return on cryptocurrency mining.
Nvidia has also tried to prevent their regular graphics cards from being used for mining, by adding speed bumps in their latest cards. In addition, they have launched their own faster card, without screen output, that is exclusively made for data processing and mining.
Jon Peddie also points out that most of the price increase that comes in the wake of the shortage of cards is probably due to mining and speculators, or scalpers, who vacuum the market with shopping robots, then re-selling the cards at a steep mark-up.
That the last year’s home office trend had something to do with the increased demand for graphics cards is rejected, since that would have made for a sharp increase in demand, which would have declined over time.