Cryptocurrency Mining and GPU Prices

As cryptocurrency mining has shifted back towards GPU, there have been concerns raised about the uptick in demand impacting the cost of GPUs — after all, with higher demand, it would make sense that the price of the hardware would go up as well, right? That only becomes the case, however, if supply remains constant and graphics cards become less accessible as a result.

If we review the price history of the GeForce GTX 1070, one of the workhorses of mining enthusiasts, we see a noticeable bump in prices — but only for a brief time.

The price of the card remained nearly constant for an entire year, and saw a sizable spike for a month or two — before the price sloped back down to the baseline, where it has remained. The Ethereum price spike in early 2018 is commonly cited as an aggravating factor in the price of the 1070. However, there may be more to this situation than just that price spike.

Let’s now look at the Ethereum price over the same timeframe:

There is an undeniable price spike in early 2018 — however, even after the bubble burst, the price still found a floor at around 400, whereas in early 2017, the price of Ethereum was near 0. Looking at individual data points for reference, we can see the price was only $25-$50 higher with a healthy Ethereum market than when it didn’t exist at all, which is only around 6–12% the original price of the card.

There is also another factor not frequently cited, but no less impactful: memory prices in 2015 and 2016 were among the lowest ever recorded, and the industry soon found itself with a memory shortage as 2017 rolled in. Smartphones began using more memory and became increasingly more popular, and consumers also began building more computers due to new CPUs coming onto the market. All of these factors combining means that GPU production stalled around the same time, which drove up the price for consumers. Although memory production has since increased, it will take some time for fabricators to catch up; the price will stay elevated for some time as it represents a lagging indicator of that memory shortage. (source

Lastly, technology retailers will often limit the number of cards that a single consumer can buy to maintain good relations with the card manufacturers; Nvidia in particular has stated that they want their hardware to be used for gaming first and foremost. This places an effective dampener on demand as consumers must source hardware from many different retailers to build a mining operation, and there are only so many trustworthy retailers to purchase cards from.

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