Data shows GPU prices have continued to go down recently as Ethereum mining profits have been observing a decline.
GPU Prices Plunge As Demand From Ethereum Miners Fades
Data from the tech outlet Tom’s Hardware suggests graphics cards prices continued their drawdown in June as they plummeted another 14%.
Back in 2020, owing to a bunch of factors like the pandemic and a chip supply shortage, the new generation of graphics cards launched with pretty low stock and prices subsequently soared.
Then as the crypto bull run raged on in 2021, Ethereum mining became quite lucrative. Miners added overwhelmingly to an already high demand in the GPU space and the perfect storm to shake the market was complete as both Nvidia and AMD cards went on to see double or even triple the prices.
This continued throughout 2021 and card availability wasn’t too bright at the start of this year either. However, as the crypto market has observed a series of crashes in the last few months and the shortage has loosened up a bit, the situation has marked a significant improvement.
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Since the January of 2022, GPU prices have declined by an average value of 57%. In the month of June alone they fell by about 14%.
Used and retail price comparison against the MSRP for the high end Nvidia GPUs | Source: Tom's Hardware
Prices for used GPUs on websites like Ebay have observed a much more serious decline than those on retailers. This would make sense as recently the Ethereum hashrate noted a drop, suggesting that some of the miners no longer turning a profit are disconnecting their GPUs and likely dumping them on reselling websites.
Why Did Ethereum Mining Profits Go Down In Recent Months?
There are a couple of main factors that have lead to ETH mining losing its high profits from 2021. The first and the most obvious one is the struggling price of the crypto.
Miners depend on the USD value of their mining rewards as they generally pay their electricity bills and other running costs in fiat. This year alone, Ethereum has lost 72% in value, which means miners’ revenues would have taken a significant hit.
The price of the crypto has crashed down over the last few months | Source: ETHUSD on TradingView
The other reason would be the ever-rising electricity prices around the world. Electricity bills usually make up for a big part of the miners’ day-to-day costs, and an increase in power prices would lead to fewer net profits for them.
The impending transition to the proof-of-stake consensus system would obfuscate miners on the network. This means that mining has a deadline for Ethereum, sooner than which miners have to turn an ROI to not lose their money.
Miners in zones with high power costs may be left with no choice other than to sell off their GPUs in order to reimburse some of their investment as they may not be able to make any profit before PoS arrives.
Featured image from Kanchanara on Unsplash.com, chart from TradingView.com