Graphics card shortage likely to end with cryptocurrency prices nosediving

The new graphics cards are nothing short of impressive, but that means little when they are near impossible to find at reasonable prices. The basic rules of supply and demand have led to the situation we’re in today where scalpers can charge triple the cost of MSRP and AIBs can slap pretty much whatever price they want on “premium” graphics cards and consumers will buy them up without hesitation. The graphics card shortage may be at the beginning of its end though, because cryptocurrency prices like Bitcoin, Ethereum, Dogecoin, and more are falling fast.

According to Tom’s Hardware, GPU prices are dropping in the Chinese market. Some models are already down by 45%, and the trend is only expected to continue. This update is in line with our report from last week which noted that prices were already on the decline. The changing situation is because of the Chinese government’s recent crackdown on crypto mining operations. Multiple large-scale operations have been ordered to cease activities. The government’s reasoning is that crypto currency poses a threat to real currency valuations, and the concerns are certainly warranted. Cryptocurrency prices are not only extremely volatile, but also based upon perceived value. These digital currencies lack the backing of institutions in many cases, with Bitcoin being one of the few options to boast heavy support from Wall Street.

In short, the Chinese government doesn’t want the practice to continue, which is causing huge waves in the market. Now that some of the largest mining operations in China (and the world for that matter) must shut down, demand for GPUs will fall. Alongside this, the recent developments will reduce investor confidence in the long-term viability and profitability of cryptocurrencies. I think you can see where this is going.

Toss a coin to your Witcher, some ain’t worth much now

If enough catalysts trigger a meltdown of cryptocurrency valuations, the viability of crypto mining for profit will also be gone. Judging by the changes in the market over the last week, we could be looking at a very different market in as little as a month’s time. In the last week, Ethereum (the most popular currency for GPU mining) has dropped from $2600 USD to $1900 USD. That’s a far margin from its record high of $4100 USD back during spring of this year.

Burn, baby, burn! (Image credit: Coindesk).

Likewise, Bitcoin has lost 25% of its value in the last week and is down to about $30,000 USD. GPUs aren’t used for mining this currency, but Bitcoin is considered the most stable of crypto currencies. Seeing that Bitcoin is now at half the price of its all-time high earlier this year, it shows a clear shift in investor enthusiasm.

Dogecoin, while we love it for being a meme, has been hit the hardest. It lost 30.5% of its value today alone. Pretty much all crypto currencies are collapsing in one way or another.

One party’s loss is another’s gain

These latest developments alongside several other ongoing developments mean a lot for the graphics card supply shortage. For starters, there is about to be less competition in purchasing directly from manufacturers. Nvidia was reportedly selling a ton of GPUs directly to miners, so a lack of demand there could free up more supply for AIBs like Gigabyte, MSI, EVGA, ASUS, and more to make more graphics cards. That means it will also be easier for consumers to buy graphics cards directly from companies like EVGA that provide the option. Another interesting side effect of the halted mining operations will be the many graphics cards no longer in use. Those could inevitably end up selling on second-hand markets like eBay for discounted prices like in 2017 when crypto crashed the last time.

Nvidia’s new RTX 30 Series cards like the 3080 Ti already make it harder to mine.

Aside from the already mentioned factors, Nvidia is now only selling LHR cards. These variants of the RTX 30 Series are locked out of the full mining potential and seemingly haven’t been cracked yet (or at least, those who have managed to do so haven’t shared the exploit widely). Lastly, manufacturers like ASRock and AMD have commented that supply is expected to improve in the months ahead.

There’s a lot to digest in the mess that is today’s graphics card shortage, but the main takeaway is that paying an exorbitant sum for a graphics card at this point is likely unnecessary. Prices are likely to get better if not significantly better. We’ll just have to wait and see how the market reacts to these changes.