Are graphics cards going to fall sharply? There are still more than 30 million graphics cards for mining waiting for a new way out

Due to the strong demand for cryptocurrency mining, the graphics card industry has continued to be hot in the past two years. Even some ordinary users and gamers who want to buy their favorite graphics cards have to face the high prices and hard-to-find ones.

However, recently, the prices of high-performance graphics cards have begun to plunge in the market. According to the latest statistics from 3DCenter on the German and Austrian markets, as of March 30 local time, the average price of A cards (AMD graphics cards) fell by 46%, and the average price of N cards (Nvidia graphics cards) fell by 35%.

An industry insider analyzed to the Blockchain Daily reporter that domestic policies to clean up and rectify virtual currency mining have led to the evacuation of domestic mines. In addition, the failure of Bitcoin prices to continue to break through previous highs in recent years has led to a corresponding decrease in the demand for graphics cards in the cryptocurrency market, causing their prices to fall.

In addition, Ethereum, the world's second largest cryptocurrency mined by graphics cards, is about to transition to the POS consensus mechanism in June of this year. This means that miners will no longer be able to mine Ethereum using graphics cards, which has led to some miners selling graphics cards in advance, causing the market supply of graphics cards to increase and the price to drop accordingly.

Graphics card demand drops sharply after mining cleanup

At present, the virtual currency market mainly includes ASIC mining machines and graphics card mining machines. Graphics card mining machines occupy a large part of the mining market share, especially Ethereum, the world's second largest cryptocurrency, whose main mining force is graphics card mining machines.

Due to the Ethash algorithm mechanism of Ethereum, it is necessary to read the memory and store the DAG file to continuously mine, which does not rely on the computer's computing efficiency but the memory reading efficiency. Therefore, traditional Bitcoin ASIC mining machines cannot adapt to Ethereum's Ethash algorithm, and Ethereum mining mainly relies on graphics card mining machines.

Ethereum graphics cards are mainly A cards (AMD graphics cards) and N cards (Nvidia graphics cards). Currently, there are only two leading independent graphics card manufacturers, AMD and Nvidia, who monopolize the core GPU chip design. In addition to these two manufacturers, Intel is also engaged in GPU chip design, but Intel's "core graphics card", that is, the GPU integrated into the CPU, is not suitable for mining.

According to 3DCenter's latest statistics on the German and Austrian markets, the average price of graphics cards has been falling for three and a half consecutive months and has dropped to the lowest point in 15 months . The last time such a price was seen was in early 2021.

Compared to a small peak in mid-December last year, the average price increase of NVIDIA graphics cards has dropped from 87% to 25%, while that of AMD has dropped from an average of 83% to 25% - that is, both graphics cards are now "only" 25% more expensive than the original price on average.

At the craziest time in mid-May last year, the average increase in AMD graphics cards reached 218%, and NVIDIA graphics cards increased by 116%.

"The price of graphics cards for mining has dropped significantly." Xie Qiang, a senior Ethereum miner, told the Blockchain Daily reporter that when the graphics card market was crazy in May last year, a mining machine with eight 588 graphics cards cost 33,000 yuan, but now it only sells for around 12,000 yuan.

In Xie Qiang's opinion, the main reason for the price drop of graphics card mining machines is that there are no mining farms in the country and the demand has disappeared.

More than 30 million graphics cards face new solutions

"Ethereum will upgrade its POS consensus algorithm in the second quarter of this year." Miner Zhong Jie told Blockchain Daily that after Ethereum upgrades to the POS consensus mechanism, Ethereum will no longer require graphics card mining machines to mine.

According to official news from the Ethereum Foundation, the hard fork upgrade Bellatrix, which is expected to merge Ethereum 1.0 and 2.0 in June this year, will merge the current chain with the new PoS beacon chain. After the merger, traditional GPU mining will not be able to be carried out on Ethereum, and will be replaced by PoS verification node protection, and will receive transaction fee rewards when the merger begins.

According to data on OKEx Cloud Chain, the current computing power of the entire Ethereum network is about 960.58TH/s. Based on the average computing power of 30MH/s per graphics card mining machine, there are more than 30 million graphics cards participating in Ethereum mining.

In Zhong Jie's opinion, after Ethereum abandons graphics card computing power mining, miners will no longer need to purchase a large number of graphics cards. At the same time, the existing more than 30 million graphics cards will face the challenge of finding a new way out.

Zhong Jie further pointed out that after the graphics card miners could no longer mine Ethereum, some miners refurbished the graphics cards of their mining machines and sold them in advance, which led to an increase in the supply of graphics cards. After losing the support of Ethereum, the demand for graphics cards in the cryptocurrency market will plummet. It is expected that the graphics card industry will only have supply problems in the early stage of the release of new cards, but it is not necessarily the current situation of shortages and high premium sales of graphics cards that have lasted for several years.

In this regard, Nvidia made a similar judgment in its 2022 financial report. The financial report mentioned in the company's recent development, future goals and challenges that changes to cryptocurrency standards and processes, including but not limited to the upcoming Ethereum 2.0 standard, may affect the usage of GPUs for Ethereum mining and the retail price of GPUs. For this reason, the company launched the LHR Geforce image processor with limited Ethereum mining capabilities and increased the supply of CMPs in an effort to meet the demand for CMPs from gamers and direct miners.