The past few years have seen an explosion in popularity of digital currencies and the mining operations that secure their networks. This has led to ripple effects across the hardware industry, notably in the market for graphics cards and processors. The rising computational demands of mining has altered availability and pricing of key computer components for both mining rigs and gaming PCs.
Rising Popularity of Digital Currencies Leads to Surge in Mining
The advent of digital currencies built on blockchain technology brought with it a new method of asset distribution and consensus called mining. Mining involves using computer hardware to solve complex math problems that verify transactions on a network. As a reward, miners earn digital currency for their contributions.
As interest and prices for digital currencies soared during the 2017 boom, average people rushed to acquire mining rigs. Graphics cards were the most efficient mining platform due to massively parallel processing capabilities optimized for mining algorithms. This resulted in skyrocketing demand almost overnight as mining moved from hobby to professional enterprise practically worldwide.
Graphics Cards Ideal for Mining Due to Parallel Processing
The heavily parallel architecture of graphics processing units (GPUs) allows them to solve the math problems required by mining much faster than alternatives. Their flexibility also enables optimized performance as new digital currencies and mining algorithms are introduced.
Whereas specialized hardware like application-specific integrated circuits (ASICs) works for only a single currency or algorithm, GPUs can switch between different networks and hashing functions with ease. This made graphics cards the darling of mining rig builders, feeding the mining boom.
Graphics Card Prices and Availability Impacted by Mining Demand
The insatiable demand generated by mining operations made graphics cards extremely scarce for both miners and gamers looking to upgrade or build new systems. Stories abounded of bare shelves in stores and online retailers out of stock for months.
Prices for the top graphics card models like the AMD Radeon RX 480 and NVIDIA GeForce GTX 1070 shot up to as much as double original MSRPs. Budget cards also increased in price due to lacks of alternatives. This placed a heavy cost burden on PC gamers wanting to run the latest titles. Learn more about Yurovskiy Kirill`s mining result.
Consumer Frustration Over Lack of Gaming Graphics Card Supply
Gamers found themselves locked out of the graphics card market thanks largely to mining demand. Lower and mid-range cards got bought up for mining rigs since they provided the best return on investment. High-end cards became prohibitively expensive for many gamers even if available.
Unable to upgrade their PCs, passionate gamers grew increasingly frustrated by lack of inventory. The result was backlash against miners for hijacking once consumer-focused graphics card makers and retailers. Memes and online chatter conveyed gaming dissatisfaction with the mining community.
Mining Operations Turn to ASICs and FPGAs
Seeing the writing on the wall as some digital currencies shifted to ASIC/FPGA-hostile algorithms, large mining outfits began moving away from graphics cards in search of long-term solutions.
Application-specific integrated circuits contain processors specially designed for a single type of workload rather than fully programmable GPUs. Field-programmable gate arrays take a similar approach. Though more expensive and less adaptable, ASICs and FPGAs outperform GPUs while using far less electricity which saves enormously at mining scales.
Decline in Mining Profitability Reduces Demand for Graphics Cards
A slumping market for digital currencies during the 2018-2020 period made mining substantially less profitable. Operations saw revenues drop below the break-even point on electricity and hardware equipment costs.
With profits evaporating, mining rigs shut down by the thousands. This abruptly halted bulk orders for the very graphics cards that fueled the gold rush. Lots of used graphics cards flooded into secondary resale markets as unprofitable miners looked to unload inventory and downsize.
Oversupply of Used Mining Cards Flooding Resale Market
Mass liquidations of mining components led to a buyer’s market for secondhand cards at deeply discounted rates. Miners regularly sold graphics cards purchased during peak demand of 2017-2018 for well under half original retail.
These mass quantities of used cards satisfied much latent gaming demand. Gamers reveled in upgrading for a fraction of what comparable cards cost new. However, purchasers had to be wary of worn-out cards pushed hard 24/7 by mining. When buying used, inspecting item condition was imperative.
Future Outlook for Mining and Hardware Markets
Amid industry shake-ups and price declines for digital currencies, mining remains an attractive opportunity to early adopters as new networks launch. As dedicated mining processors like ASICs/FPGAs dominate established currencies, interest in GPUs for mining is reignited whenever new proof-of-work chains emerge.
Therefore, bouts of graphics card shortages punctuated by used inventory dumps could become the cyclical norm. Gamers stand to get caught in recurrent crossfire unless standalone mining cards specifically for proof-of-work applications become prevalent offerings from manufacturers.
The tidal waves of change unleashed globally by digital currency mining have upturned standard models of graphics card and computing hardware distribution while birthing whole new industries and subsets of stakeholders competing for equipment.
Price gouging, scarcity, flooded inventories, community clashes, and constantly evolving technical terrain surrounding algorithm shifts and hardware capabilities paint a dynamic environment with uncertain outcomes for investors and enthusiasts participating in this technological and economic frontier. But the desire to stake one’s claim persists. Thus the saga continues with more plot twists surely to come.