The hottest graphics card in Huaqiangbei is priced at 14,000. The popularity of virtual currency "mining" is forcing global chip giants to hurry up

Source: 21st Century Business Herald Author: Jiang Yue

Virtual currency triggered an explosive market trend, and the "mining farm" motor restarted. However, this wave of market trend has boosted the high-end gaming graphics card market, and "graphics card speculation" has become popular in Shenzhen's Huaqiangbei!

Merchants in Huaqiangbei bluntly said: "Mining machines are not as good as graphics cards. Mining machines can only mine Bitcoin, while graphics cards can mine various other currencies." Faced with the relatively calm mining machines sold in a "futures" manner, the ace graphics cards are even more popular in Huaqiangbei, creating a hot market where "one card is hard to come by."

Southern Finance Omnimedia reporters visited Shenzhen SEG Plaza and Xinhuaqiang and found that the latest asking price for an Nvidia RTX 3080 this week was 14,000 yuan, 8,500 yuan more expensive than the official guide price. Other Nvidia graphics cards in the RTX 30 series and RX graphics cards from Advanced Micro Devices (AMD) are all popular in the market and in short supply.

In addition, on February 26, Beijing time, NVIDIA plans to officially launch the new graphics card RTX 3060 to the market. However, just like the speculation of iPhone and milk tea in the past, some market participants currently expect that the supply will be less than the demand, and gamers and virtual currency speculators will inevitably rush to "grab the goods". One netizen left a message on NVIDIA's official Douyin account, asking: "Do I have to spend 20,000 yuan to grab the RTX 3060 with a guide price of 329 US dollars?"

On February 25, Beijing time, Nvidia, the largest graphics card stock listed on the Nasdaq, will also release its fourth-quarter 2020 performance report. The boom in graphics card prices during the period is expected to be reflected in this report from Nvidia.

Gaming graphics cards are popular for mining, but prices are outrageous

At noon on February 22, the temperature in Shenzhen Huaqiang North reached 26 degrees, and the midday sun was as hot as summer. Although it was the eleventh day of the first lunar month, the Huaqiang North Pedestrian Street, known as the "No. 1 Electronics Street", was bustling with people, and merchants and buyers returned to the market early, reflecting that the domestic sales and foreign trade business represented by electronic components were proceeding as usual.

In SEG Plaza and Xinhuaqiang Plaza on both sides of the pedestrian street, almost all businesses are open, except for some "mining machine" stalls where sellers are nowhere to be seen, leaving only QR codes for remote contact. A female shopkeeper who still sticks to the stall explained to reporters in financial terms: mining machines are currently accepted for "futures" trading, and "delivery can be made in March or May." Although she sells several major mining machines such as Ant, Shenma, Avalon, and Yibit, she said there is no spot.

Since the second half of last year, the virtual currency market, which had been dormant for two years, has revived. Bitcoin was the first to rise steadily from below $10,000 per coin, breaking through $20,000 in December and $50,000 in February this year. Driven by Bitcoin, the entire virtual currency market is booming, with Ethereum (ETH) rising simultaneously, and Ripple and Litecoin, which have slightly smaller market capitalizations, following suit. Under such market conditions, the "mining" industry has started again.

However, the reporter noticed that the store of the above-mentioned mining machine sales manufacturer was full of graphics card packaging boxes. The red graphics card packaging boxes printed with the word "RADEON" and produced by Advanced Micro Devices (AMD) of the United States were piled up half a person's height, reflecting that this mining machine seller was also selling AMD's high-end video game graphics cards. At another mining machine seller, there were piles of green graphics card packaging, which was manufactured by Nvidia of the United States and was also a high-end video game graphics card.

Moving upstairs, the reporter saw merchants who originally sold traditional mining machines assembling new "graphics card mining machines." Two shopkeepers were installing two rows of graphics cards on a mainframe that was larger than a game console, making the entire machine look quite "magnificent."

When we came to the shops selling gaming equipment, we saw red and green packaging boxes on the counter, which was very eye-catching. However, when we asked about the source of the goods, almost all the shops replied "out of stock". The only seller with RTX 3070 graphics card said that he was willing to sell it for 9,800 yuan each, while the official suggested retail price of this graphics card is 3,899 yuan, which means that the price in Huaqiangbei is 5,900 yuan more expensive.

When asked by the reporter, the sellers who were having a meal asked bluntly: "Are you buying it for 'mining'?" One seller laughed and said: "Can you buy it for playing games?" The sellers revealed to the reporter that recently game players have no cards to buy and can only settle for some low-end graphics cards "for temporary use" or switch to Xbox, Play Station, Nintendo Switch, etc.

Nvidia RTX 3080 graphics cards, which are widely known in the market as "carving cards" and "king cards" for mining, are in short supply. A merchant from Xinhuaqiang quoted a price of 14,000 yuan per card to the reporter that day, which is 8,500 yuan more expensive than the official guide price of 5,499 yuan. At the same time, he couldn't help but laugh at himself: "It's outrageous!"

8-card mining machine earns 256 yuan a day

Various "graphics card/GPU mining" tutorials are also rapidly popular in the cryptocurrency circle. Unlike cryptocurrency speculators who only care about the price of the currency, "miners" also need to care about equipment prices, electricity costs, noise, and residual value, and ultimately form a static expected ROI (return on investment).

Taking the current residential electricity price in Shenzhen as an example, the three-tier peak electricity price is as high as 1.38 yuan per kilowatt-hour, and the first-tier valley price is as low as 0.33 yuan. In total, the total meter electricity price is close to 0.7 yuan per kilowatt-hour. However, a seller at SEG Plaza told reporters that it is necessary to send the mining machine to a professional mining farm for hosting, so as to obtain better investment returns. These mining farms all look for areas with low electricity costs to set up factories, and the average electricity price per kilowatt-hour can be as low as 0.4 yuan or less.

According to the quotes of mainstream exchanges in the cryptocurrency circle, Ethereum (ETH) has become the second most popular virtual currency after Bitcoin. On the evening of February 20, the ETH quote once exceeded $2,000, an increase of 167% from the $750 level on December 31 last year. Bitcoin once exceeded $58,000 in the early morning of February 22, doubling from the $29,000 level on December 31 last year. This reflects that the return on ETH speculation is better than that of Bitcoin in the near future.

Traditional mining machines are generally used to mine Bitcoin and are "customized" products. However, graphics card mining is different. It can mine various virtual currencies such as Ethereum and Litecoin. According to the online tutorial, you only need to download the written program documents, which is very convenient to operate. Since the price of Ethereum has increased more than that of Bitcoin, investors may not consider mining with mining machines, which has led to the trend of "graphics card mining".

In the Ethereum "mine", the RTX 3080 is the "king card", which means the highest single-day return. Take a mining device with 8 RTX 3080s as an example, plus the CPU, memory, cooling device, etc. in the host, the hardware investment will exceed 110,000 yuan based on the current market price of graphics cards. This set of equipment has been tested in the market and is rated as having a computing power (also known as hash rate) of 760MH (760 million hashes) per second and a power consumption of about 2,000 watts. However, the difficulty of mining ETH is actually increasing. According to CoinWarz data, the latest ETH difficulty coefficient on February 24 has reached 5.48P, a sharp increase of 55.3% in the past 90 days.

The reporter checked the real-time return and set the electricity price to $0.06 (about 0.39 yuan per kWh). With the current difficulty of ETH mining, 0.02410424 ether can be mined every day. According to the price of $1,644 on February 24, the income excluding the handling fee is $39.63 (about 256 yuan). In other words, it will take 430 days just to get the equipment worth more than 110,000 yuan back. Unless the price of ether is expected to continue to rise and the residual value of the graphics card in the second-hand market after "retirement" is considered, such a set of "mining" equipment will have investment significance.

Nvidia takes action to restrict "miners" from grabbing cards

Both NVIDIA and AMD, as leaders in the global chip industry, have produced GPUs that have cost countless engineers a great deal of research and development effort. However, they never imagined that such high-end and sophisticated technology products would one day be used solely for mechanical "mining."

In fact, the RTX 3080 graphics card that is being snapped up by "miners" is the flagship product of the manufacturer NVIDIA. In order to create this gaming graphics card, NVIDIA, which leads the world's chip companies with GPU technology, has explored high-end technologies such as ray tracing, DLSS, and Reflex. The original intention is to allow gamers to enjoy 3A masterpieces, enjoy the ultimate beauty of the game screen and the speed and passion without any sense of delay. However, these functions are completely ignored in the "mine".

According to earlier reports, on February 18, Nvidia called for "letting GPUs belong to games and letting mining products belong to 'miners'". In order to prevent RTX 3060 from being snatched up by "miners" on February 25, Nvidia announced that it would launch CMP products specifically for mining, while warning that the hash rate of RTX 3060 would be cut in half. On Nvidia's official Douyin account, a gamer sent a "tearful" emoji and cried: "Restrict them (virtual currency speculators) and give us gamers a way to survive."

Nvidia will release its fourth quarter and full-year 2020 financial results after the U.S. stock market closes on February 24, Eastern Time. The "graphics card speculation" market began in the fourth quarter of last year and is expected to have an impact on Nvidia's performance. The market currently expects the company to earn $4.82 billion in sales revenue in the fourth quarter, up 63% year-on-year.

In the 2020 U.S. stock market, which was booming with chips, AI, high-performance computers, and video games, Nvidia was clearly a leader, with a year-round increase of 122%. Based on the closing price as of February 23, Nvidia's market value reached $350 billion, ranking 16th among U.S. stocks, while veteran semiconductor company Intel ranked second with a market value of about $250 billion.