The GPU Dilemma: Gaming, Crypto-mining and Market Challenges

We’ve witnessed an unprecedented market for GPUs develop over the past two years as manufacturing and shipping challenges brought forth by the on-going pandemic alongside skyrocketing demand have together blended into a most unsavory cocktail of exponentially increasing prices coupled with oftentimes severe availability constraints of this commodity. Fueling this fire is the apparent willingness of both gamers and miners to shell out more cash than ever before on GPUs even as scalpers circle overhead like vultures, waiting for the weary GPU hunter to finally fall to their knees as they collapse, completely exhausted and spent, out of the seemingly never-ending queues at retail and online stores, sometimes formed days before launch.

Really the market needs no introduction, yet for the sake of this write-up it got one. Indeed, the market has been terrible for many commodities since the pandemic took root, and our beloved GPUs are no exception.

What then are you, the regular GPU buyer to do in this situation in 2022? At a time when every GPU review is negative and community feedback ranges from “not worth buying even at MSRP” to “fuck scalpers”, what exactly are you to do? I hope this article helps you with that.

Stop living in 2019/2016/<insert_golden_year_for_hardware_availability>

Yes, there have been golden years where availability rained aplenty while prices bottomed out as we all enjoyed the spoils of a buyers’ market. But having already alluded to the supply-chain constraints, that’s simply no longer the case:

Manufacturing costs are up for seemingly every possible reason, from a dramatically increased demand on foundries for chips for every application ranging from automobiles to kitchen appliances to a shortage of raw-materials and skilled labor as people fall ill and lockdowns ensue. If that weren’t enough, black swan events such as climate and energy crisis induced factory shutdowns added liberally to the mess.

Meanwhile shipping costs remain sky-high as ports remain backlogged from lockdowns and illnesses amongst staff leading to a shortage of deck hands to move all that cargo (source below)

So, when something no longer costs as much to make and ship, it’s price and value are bound to change.

Now add to the above that not only are gamers willing to pay more than ever before for GPUs, but an entirely new market has formed, one that’s willing to pay even more and buy in bulk: the dreaded crypto-miners. Scalpers and automated bots that snag online stock are simply a natural & unsurprising byproduct of such a market…

Having said that, as an end-user and consumer you’re not obligated to think about and respond to all this when making a purchase, though it would behoove you to. Which is why having said all this it’s prudent to keep in mind that…

…it’s a personal decision

Whether you choose to accept the market challenges and pay the premium is purely a personal call for you to make — how much does this hobby mean to you? Do you value it enough to pay a price that would be considered a “bad deal” in a buyers’ marker? At the end of the day, if it’s a good deal to you, if it’s worth it to you, then that’s all that matters. Don’t let any review or internet echo-chamber tell you otherwise. Having said this, should you…

…pay an insane MSRP, or buy a lower-tier card from a scalper?

While this again ties in with the above point, I’d advise the former. While buying an RTX 3090 or RX 6900XT would have been considered bad value in the buyer’s markets of yesteryears, if you hypothetically have a chance to snag them at MSRP from an official source today (very rare, thus the hypothetical nature of this scenario) then I’d say that’s worlds better than paying a scalper the equivalent of nearly $900 for a RTX 3070 or RX 6700XT. Not only does buying at MSRP not feel like a complete rip-off, it’s also far better in relative terms: you’re getting one of the fastest GPUs available at MSRP, as opposed to paying 2x MSRP for a card that’s 40% slower and with half the VRAM of the 3090. Regardless, you could make the argument that a $1000 RTX 3070 is $500 cheaper than a RTX 3090 at MSRP, and no one can deny that. So again, it’s up to you to make a personal choice: do you focus on the better relative value of the more-expense-but-at-MSRP card or look one-dimensionally at the cost? Purely your call, just make it well. And just to clarify — by scalper I mean an overcharging but well-established retailer. NEVER go to those shady eBay crap lords. But whatever you do…

…don’t rely on market conditions improving

We all have this optimist within us that remains hopeful for an improved market in the mid to near future, whether that be by an easing of manufacturing and shipping constraints or mining demand evaporating due to a crash in the crypto markets or even because Ethereum switches off mining.

Don’t fall for this: we honestly have no idea when manufacturing & shipping costs will go down. It could be a few months, or it could be a few years and while no one can say for sure, industry analysts tend to believe that it’ll be some time before the situation truly eases (source below)

And as for the latter…

…cryptocurrency mining is here to stay

There’s indeed a direct tie-in between GPU prices and the crypto markets: when Ethereum crashes, so does the price of GPUs. However, be sure to react fast if you see this and don’t keep waiting for a bigger crash — while crypto markets have historically slumbered into long bearish periods, as crypto coins have become more popular among the general populace they have tended to recover faster from crashes.

And it honestly doesn’t matter if Ethereum switches away from mining. I’ve eagerly been awaiting this too, but recently found myself pondering the question, ‘Then what?’ and the unpleasant but honest answer is that another profitable-to-mine coin will undoubtably take its place. The fact is that a large market has been formed around crypto-mining, and today that market is largely centered around Ethereum. But that needn’t always hold true, and Ethereum switching away from mining will simply create a vacuum, and nature (and the markets) abhors a vacuum, so it’ll only be a matter of time before another crypto-coin comes forth to fill this space. It’s naïve to think otherwise.

A Brave New World

We live in unprecedented times: a global pandemic rages on, mutating its way into persistent daily relevance while manufacturing and shipping delays plague commodities exchanges and markets worldwide. Climate-change induced freak weather events instill further chaos, with both preventive & responsive measures inducing further delays. And to top it all off, the looming threat of an energy crisis forces Asian factories into reducing operating hours while across the world European nations scramble to ensure they have enough power for the bleak winter months. And despite it all, wealth skyrockets within the elite class leading to millionaires worldwide calling for higher taxes on their own selves.

Who’d have seen this craziness coming to shore? Very few, if any at all.

Don’t get caught up in comparisons from an era gone past, unpredictable market conditions are here to stay a while. Do consult the charts and graphs within hardware reviews, but do not allow their conclusions alone to color your final opinions as many journalistic outlets are themselves yet to adapt mentally to this new reality. Be objective in your analysis and purchase what fits the bill for you: Afterall, you’re the one paying the price.

Sources:

The Economist — Just how gummed up are supply chains? — https://outline.com/YjdsGm | https://www.economist.com/finance-and-economics/2022/01/22/just-how-gummed-up-are-supply-chains

MoneyControl — Why the shipping container crisis will not end soon — https://www.moneycontrol.com/news/business/explained-why-the-shipping-container-crisis-will-not-end-soon-7743451.html

Reuters — ASML Reports Fire at its Berlin Factory — https://www.reuters.com/technology/asml-reports-fire-its-berlin-factory-2022-01-03/

(Old but relevant) Tom’sHardware — Samsung Texas fab shutdown to impact 1%-2% of 300mm Capacity — https://www.tomshardware.com/news/samsung-foundry-austin-blackout-impact

EETimes — COVID lockdown in China Threatens DRAM Supply Hiccup — https://www.eetimes.com/covid-lockdown-in-china-threatens-dram-supply-hiccup/

Mint — China’s energy crisis is latest supply chain threat to world — https://www.livemint.com/news/world/chinas-electricity-crisis-is-latest-threat-to-global-supply-chain-11632790649848.html

Power-technology.com — The global trickle-down of China’s energy supply shortage — https://www.power-technology.com/features/china-energy-crisis/

The Wall Street Journal — China COVID19 Lockdowns Hit Factories, Ports in Latest Knock to Supply Chains — https://www.wsj.com/articles/china-covid-19-lockdowns-hit-factories-ports-in-latest-knock-to-supply-chains-11641918247

WSJ — Europe Energy Crisis Goes Global — https://www.wsj.com/articles/europe-energy-crisis-goes-global-shortages-natural-gas-wind-solar-coal-russia-china-germany-11641335775

Reuters — Millionaires Group Calls for Wealth Tax at Virtual Davos — https://www.reuters.com/business/millionaires-group-calls-wealth-tax-virtual-davos-2022-01-19/

The Guardian — Millionaires call on Governments worldwide to ‘tax us now’ — https://www.theguardian.com/business/2022/jan/19/millionaires-call-on-governments-worldwide-to-tax-us-now