The recent easing in graphics processing unit (GPU) prices could slow down if the developers behind the popular cryptocurrency Ethereum continue to delay a highly anticipated update. Ethereum is one of the few valuable digital coins out there that can be ‘mined’ using a GPU, a fact that has resulted in miners buying GPUs in bulk and depriving those looking to use them for other purposes, such as gaming, from getting their hands on the products.
Combined with the global supply constraints in the wake of the coronavirus pandemic, the massive use of GPUs for cryptocurrency mining resulted in severe shortages in the market that saw users having to wait for months before being able to get their hands on the latest products. However, Ethereum’s planned migration to proof of stake from proof to work did exhibit some signs of easing the market. Yet, this update has now been delayed, making the future of the GPU market uncertain once again.
Ethereum Update Delayed To Second Half Of 2022 Creating Risk Of Slowing Down GPU Price Drops
Reports of GPU prices dropping after surging to record levels last year have been slowly surfacing over the course of this year. Two of these reports surfaced in March, with the first stating that NVIDIA Corporation informed its partners that a lowering of manufacturing costs should result in the prices dropping by at least 12%. This was immediately followed by another that outlined that the prices of NVIDIA’s RTX 3080 GPU had dropped by 35% in Australia, suggesting that retailers were unsure of the premium offered by a GPU in the wake of the planned Ethereum migration to proof of stake from proof of work.
For the uninitiated, the latter is more computationally intensive than the former. It requires miners to regularly crunch numbers for network performance in order to receive an award in the form of an Ethereum coin. Subsequently, it raises their need for a GPU to perform this work.
Gamers were in for some more good news in late March when ASUS announced that it would drop the prices for all of its GeForce RTX 30 products starting this month,. Some of the prices would be cut by as much as 25%, amidst worries that it would result in retailers preemptively selling their products due to fears of sitting on expensive inventory.
Now that Ethereum developer Tim Beiko has confirmed that the migration to proof of stake will not take place by the end of the first half of this year, it’s unclear whether the start of a downward trend for GPU prices will sustain. The delay is likely to give miners added incentive to hold on to their cards, and it might even intensify their mining efforts since they will be eager to extract as much profit as they can before the shift takes place in the fall.
The shift to proof of stake has been in the works for years, and whenever momentum builds up, some miners quickly dump their tools in the resale market due to worries about equipment price drops. For instance, it was in July last year when the upcoming update and China’s cryptocurrency crackdown led to used laptops and GPUs flooding the market. This was despite the fact that 2021 was one of the best years for the cryptocurrency sector since its inception. These products were available at significant discounts over their original prices, reflecting the rough and heavy usage that they had been put through.