GPU prices are still on a decline: Is Bitcoin’s sorrow gamers’ joy?
Times are hard for Bitcoin and other cryptocurrencies, but gamers are in luck, as GPU prices are now more affordable.
The prices of graphics processing units (GPUs), also known as graphics cards, are undoubtedly still a far cry from the manufacturer’s suggested retail price (MSRP). However, they aren’t what they used to be either, especially considering what GPU prices looked like just a year ago.
For instance, the price of a GPU from Nvidia GeForce RTX 30-series is 14% over its MSRP, according to reports from 3D Center. Whereas AMD’s Radeon RX 6000 is up 7% from its MSRP from April 17 and May 8. On the other hand, it is the first time since January that AMD’s Radeon RX 6000 dropped below 10% over MSRP.
Meanwhile, just a month ago, these same prices were 19% and 12% above their MSRPs, respectively.
The Nvidia RTX 3080 currently goes for a price range between $1,000 to $1,300. Despite being at such a long distance away from its $699 MSRP, the price is still down by almost 30% from its peak at $1,800.
Regardless, the question on everyone’s mind remains whether, perhaps, the falling GPU prices are in some way related to the current cryptocurrency market situation.
Presently, there’s almost no digital asset big or small that hasn’t been hit by the crypto market tsunami. While crypto continues to crash, GPUs are becoming increasingly affordable. So, one might wonder what is responsible for the continuous fall of GPU prices in recent times.
The founder and CEO of Aldrin, Hisham Khan, believes that the bull market in the crypto space benefited GPU makers such as Nvidia a lot. If the current market downturn and sell-off continue, together with a prolonged period of low activity in the crypto space, that would “definitely impact GPU makers.” He told Cointelegraph:
“If you’re mining Bitcoin and other cryptos with an Nvidia graphics card, the amount of time that you would need to spend mining after committing capital to buy these GPUs would depend on the price of the crypto assets. If the price drops you would need to mine longer to breakeven, which might deter people from jumping into mining.”
Factors that cause GPU price hikes
GPU prices can go frenzy for several reasons, and some of them include high demands for new products, global chip shortage, supply chain issues, and increased demand that stems from the crypto boom.
Firstly, as happens with almost every upcoming product, there’s a promise of better features or performance over the predecessor resulting in an increased demand for the product and an unavoidable price increase.
For instance, while Nvidia and AMD are set to release their next-generation graphics cards, one can expect some sort of overpricing. That should also, in a way, lower the prices of cards that are already out on the shelves.
According to a report by Digital Trends, some believe that once both the Nvidia and AMD launch their new products, any other GPU that currently exists will undoubtedly dip in price or go even below their MSRPs.
Secondly, when chip shortages happen, producing graphics cards becomes even more cumbersome and then there’s a struggle to lay hands on the few GPUs in circulation. Just as expected, demand rises and prices inevitably shoot up as well.
Lastly, there’s a strong link between graphics cards and the cryptocurrency market, as GPUs can be used to solve the cryptographically intensive process of proof-of-work (PoW) blockchains like Bitcoin.
According to a Digital Trends report in 2021, around 25% of all graphics cards sold in the first quarter of the year went to crypto miners. That accounts for nearly 700,000 GPUs; as seen many times in the past when crypto is booming, GPU prices are mostly up and vice versa.
Bitcoin’s sorrow, gamers’ luck
Khan believes that whether gamers are into nonfungible tokens (NFTs) or crypto, “I would say that the branding and so far on what NFTs and the crypto community has done” for the gaming space has not been received very well. He said:
“There’s a common sentiment if you just look at the top streamers that play games that NFTs and crypto are extremely bad, everything is written off as just a scam. So, there is a necessity for good actors in the space to create a fun and sustainable game that would benefit from leveraging crypto and tokenization technology, not the other way around.”
The current fall in GPU prices may be attributed to the current cryptocurrency market situation. Crypto prices took a dive, and, in the same manner, graphics card prices are declining in price as some smaller miners reliant on ad-hoc operations with GPUs exit the market.
However, some believe that graphics card prices have been falling consistently over some time. In fact, in February 2022, a report by Tech Times already suggests a price slash across the board on the GPU scene.
It should be noted that the crypto market crash did not exactly happen overnight either, as the market has been in a general downturn since the year started.
Although volatility and the crypto market go hand in hand, the past week has been one of the wildest ever in the crypto space. Ever since reaching all-time highs in November 2021, the two leading cryptocurrencies, Bitcoin (BTC) and Ether (ETH), have been on a downward spiral. And, once it got to the aforementioned top two, the bear market or the so-called crypto winter came for the whole ecosystem.
According to a Reuters report, however, the recent crash saw the cryptocurrency market lose about $800 billion in value within a month. And, though GPU prices and gamers live for this to happen, miners do not.
Miners are usually rewarded 6.25 BTC for completing a block, according to Investopedia. This means that around last November, when Bitcoin’s price was around $55,000, the reward for completing a hash would have been around $344,000. But today, BTC trades at roughly $30,000, and the reward figure is expected to be around $188,000 for completing a hash.
Meanwhile, increasing electricity costs and a higher mining difficulty are cutting into the profit margins of cryptocurrency miners, which may be driving some to exit the market.
In addition to the current market conditions, there’s also the issue of Ethereum’s migration to a proof-of-stake (PoS) model. This form of consensus mechanism will rely not on miners solving cryptographic puzzles to verify transactions but on staked tokens to maintain the health of the network, entirely defeating the aim of mining and thus opening up a massive supply of GPUs to the regular gamer.
Recent research from the popular analyst and pioneer in the graphics industry Jon Peddie, who is also the head of Jon Peddie Research (JPR), has claimed that cryptocurrency miners usually make massive, bulk GPU purchases for their operations. So, now that crypto prices are on a downward trend, the graphics card market is set to be largely affected.
Meanwhile, it is quite important to understand that the crypto may eventually recover, and when the market does recover, chances are that GPU prices could go up again, especially considering the ties between GPU prices and the crypto market that have been established so far.