Is it time to buy graphics cards at a bargain price now?

A year ago, ETH was advancing rapidly, and the market demand for graphics cards was rising. At its peak, it was a luxury to buy a new graphics card at the original price. If you wanted to own a graphics card, you had to go to the secondary market and accept a super high premium. But this could not control the miners' desire for the wealth effect. Graphics cards were in short supply, and even gaming laptops were sold out.

The biggest beneficiaries of the rising demand for graphics cards are of course graphics card manufacturers. The profits of Nvidia, the world's largest graphics card company, have long been fully linked to crypto mining. Even though Nvidia has repeatedly tried to reduce the impact of mining on the graphics card market, in fact, the graphics card market has been affected by crypto assets and has formed a certain cycle. As the price and market value of ETH continue to grow, its influence on the graphics card market is gradually increasing. Therefore, its price fluctuations also affect the graphics card market.

Recently, with the sharp drop in ETH prices, ETH mining hashrate has also hit its largest weekly drop in nearly a year, with the average hashrate falling back to last December. At the same time, the expected launch of ETH 2.0 also affects the direction of the graphics card market. So is it time to copy graphics cards now? BlockBeats attempts to explore the past and future trends of the graphics card market.

ETH network computing power and price (2017.07-2022.07), source: OKLink

The love-hate relationship between graphics card manufacturers and crypto mining

For graphics card miners, the main concerns are factors such as the ETH network situation (including difficulty, average computing power level), ETH price, graphics card price, graphics card computing power, etc. For gamers and ordinary users, the main concerns are the price and performance of graphics cards.

From the perspective of usage, graphics card miners can afford a higher premium to purchase graphics cards than ordinary users. Take the GTX 1060 6G, a "sweet-grade" graphics card launched by Nvidia in 2016, for example. Its official price for the non-public version is 1,999 yuan. However, when the ETH mining boom came, the card was priced at more than 3,000 yuan for a long time, exceeding the price of 3,499 yuan for Nvidia's sub-flagship graphics card GTX 1070Ti. When the mining disaster came, the market was flooded with a large number of GTX 1060s with three-digit prices.

Steam's latest hardware report for June 2022 shows that the GTX 1060 is still the most used graphics card on the platform with 132 million active users this month, accounting for 7.02% of the platform's users.

Steam June 2022 Hardware and Software Survey, Source: Steam

The crypto mining craze can not only affect the price of graphics cards in the secondary market, but can also affect manufacturers’ pricing systems, and even a strong company like Nvidia cannot avoid it.

For example, in September 2020, NVIDIA released the "GeForce RTX 30 series" graphics cards based on the Ampere architecture. While the performance of the RTX 3070 is almost the same as that of the previous generation flagship product, the official price of the RTX 3070 is 40% of the previous generation flagship card RTX 2080 Ti. The performance of the RTX 3080 is improved by 40% on the basis of the RTX 2080 Ti, and the price is only 55% of the latter.

This is not Nvidia's attempt to be "charitable", but crypto mining has penetrated the business strategy and pricing mechanism. On March 12, 2020, anyone who has participated in cryptocurrency will never forget the sudden crash of the crypto market, with ETH reaching $80 at one point. This also directly led to miners selling graphics cards regardless of cost, and manufacturers' new graphics cards were unsalable.

Graphics card cycle

Along with this crypto bull market, Nvidia released the 30 series graphics cards in 2020. Obviously, graphics cards have also gone through their own cycles. This top-notch graphics card on the market at the time was not only recognized by gamers, but also provided miners with new tools.

As a result, prices in the secondary market for graphics cards took off sharply. The epidemic caused supply shortages and a surge in demand, making graphics cards hard currency.

We calculated from the official release date of NVIDIA RTX 3080 on September 17, 2020, the ETH network computing power increased from 234 TH/s to a maximum of 1266 TH/s.

What does the additional 1032 TH/s mean? If it is fully converted to 3080 (calculated at 100 MH/s), it is equivalent to adding 10.32 million graphics cards to the entire network for ETH mining.

However, as the bull market ended, the initial rush for premiums also had a counter-effect when mining accidents occurred. In the second quarter of 2022, with the computing power of the entire Ethereum network plummeting by more than 30%, the price of graphics cards finally fell below the original price. If converted into graphics cards, it is equivalent to 3.8 million 3080 graphics cards shut down and flowing into the market.

In hindsight, the sharp drop in computing power or the shutdown of a large number of graphics cards has long been reflected in the sluggish sales of graphics cards in the primary market. As early as April 15, JD.com launched the "Graphics Card Price Guarantee 618, 180 Days Only Replacement Without Repair" campaign, which was unprecedented in its strength. According to incomplete statistics from the media, JD.com only sold 900 10G versions of 3080 during the 618 period. In addition to China, graphics cards in the US market are also unsalable. As early as the end of March, Asus announced that the company's 30 series graphics cards will be reduced by 25% from April 1.

There is another important reason why the 30 series graphics cards are unsalable, which is that they are already at the end of their product life cycle. The latest news shows that the 40 series graphics cards may be officially released as early as Q4 2022. However, judging from the fact that both Nvidia and AMD have cut orders from TSMC, sales expectations for new graphics cards may have declined.

Will the 30 series be the last batch of mining cards?

Judging from various information, perhaps the 30 series graphics cards will become the largest batch of mining cards.

The ETH merger is expected to take place in September. After the merger is completed, ETH's consensus mechanism will switch from PoW to PoS, and graphics cards will no longer be needed for mining. However, some miners believe that after the merger is completed, PoW mining will continue for a while, or ETH will be in a PoW+PoS coexistence mode, or miners are ready to make ETH fork, so graphics card mining can still continue for a while.

According to media reports, NVIDIA is expected to launch only one flagship 40 series graphics card this year. Considering the cost-effectiveness and payback period, even if ETH PoW mining can continue, there will not be a large number of 40 series graphics cards participating.

Looking at the current crypto market, some projects such as distributed rendering and ETC may be able to take on a small portion of graphics cards, but obviously no single crypto asset can take on such a huge amount of graphics card computing power.

Faced with such a large base of computing power and miners, some forces are ready to fork. However, without the support of the masses, time accumulation, and bull-bear cycles, it is clear that this process will be a mess.

So is it possible to buy it now? It would be a better choice to buy a sufficiently cheap mining card or wait for the 40 series graphics card.