Why crypto min­ing has dou­bled GPU val­ues


Some­thing very strange is hap­pen­ing to the graphics card mar­ket. Prices of cur­rent gen­er­a­tion Nvidia cards, like the GTX 1070 and GTX 1060, aren’t just more ex­pen­sive than they were at launch in 2016—they’ve dou­bled. It’s a sim­i­lar story for AMD’s lat­est batch of Vega cards. This would be bad enough for gamers, but ma­jor re­tail­ers have such low stocks of them that even if you wanted to shell out dou­ble the RRP for a new graphics card, you’d have a job find­ing one. The prob­lem is cryp­tocur­rency. As well as spawn­ing all man­ner of self-sat­is­fied mil­lion­aires who hold the keys to vast for­tunes on flash drives, and love to tell peo­ple how many frac­tions of a penny one bit­coin was worth when they bought theirs, it’s tanked the graphics card mar­ket.

That’s be­cause graphics cards of­fer a method of gen­er­at­ing these cur­ren­cies a process known as ‘min­ing’. Min­ing works like this: Cryp­tocur­ren­cies rely on the com­pu­ta­tional power of their users’ ma­chines to process and ver­ify trans­ac­tions. If you run a min­ing pro­gram, and there are many peo­ple out there who do, you’re chip­ping in on the gar­gan­tuan task of pro­cess­ing a global cur­rency’s live trad­ing. The more you help the mar­ket, the more of that cryp­tocur­rency you can ac­quire as a re­sult of your ma­chine’s hard work. Hence: Min­ing.

That’s the the­ory. In prac­tice it’s ac­tu­ally quite tough to make money solely from min­ing. Es­ti­mates in 2014 were that it takes about 71,123 weeks, or 1,367 years, for one per­son to suc­cess­fully mine one lone bit­coin. That hasn’t dis­suaded peo­ple, though. Given that one bit­coin is worth around $9,800 as I write this (it most def­i­nitely won’t be when you read this as it fluc­tu­ates wildly) af­ter a ma­jor slump, even a small frac­tion of a bit­coin still holds value. Enough value to at­tract min­ers in their thou­sands, work­ing in­di­vid­u­ally or in net­works. But for most the mar­gins are slim. If you’re earn­ing 0.00001406 bit­coins per week, the elec­tric­ity cost of ac­tu­ally run­ning your ma­chine starts to negate the po­ten­tial pay­out.

Tools of the trade

What do you need to mine cryp­tocur­ren­cies, ex­actly? Which par­tic­u­lar com­po­nent of­fers you a huge amount of com­pu­ta­tional power? Ex­actly. It turns out that pow­er­ful gam­ing graphics cards are also re­ally good at crunch­ing away at com­pu­ta­tional min­ing stuff, too. And in much the same way that two heads are bet­ter than one, a pair of Nvidia GTX 1080s whirring away in SLI for their crypto-mad ma­ni­a­cal mas­ter are more ef­fec­tive than a sin­gle card. Peo­ple even build ‘farms’, you know. Top-end gam­ing rigs lin­ing the walls as far as the eye can see. Prob­a­bly.

In sim­ple terms, this means that in the last cou­ple of years there have been two dis­tinct and iden­ti­fi­able groups vy­ing for

a prod­uct that is pri­mar­ily in­tended for just one. And the laws of sup­ply and de­mand are pretty clear when such an event crops up: When the de­mand goes up, the prices go up. Right up, in fact.

It started with the high-end cards, like Nvidia’s GTX 1080 and AMD’s RX Vega 64. Min­ers bought those mod­els so ex­ten­sively that, for long pe­ri­ods, both man­u­fac­tur­ers strug­gled to meet the in­tense de­mand. The ru­mored low yields on 16nm and 14nm chips—aka the pro­por­tion of chips that have to be thrown in the bin as part of the fid­dly pro­duc­tion process—also con­trib­uted to the short­age, but mostly we can blame it on the cryp­tocur­rency min­ers. These min­ers then cast their gaze fur­ther down the graphics card hi­er­ar­chy and sub­se­quently bought AMD RX Vega 56s and GTX 1060s and 1050s, all of which have also roughly dou­bled in value since their re­lease.

If you track prices of sev­eral pop­u­lar Nvidia graphics cards over the last 12 months, you’ll find con­sis­tent spikes across the board. The GTX 1060, for ex­am­ple, sold via third-party sellers for $249 when it launched, and 17 months later it es­ca­lated up to a high of $750 on Jan­uary 15,2018. Seven hun­dred and fifty dol­lars. Third-party mod­els of the GTX 1070 were once priced as low as $352 in April 2017, and reached a high of $1,090 on—once again—Jan­uary 15, 2018. The GTX 1080 has seen just as ridicu­lous a spike. Third-party sellers had it priced at a low of $520 in May 30, 2017. They’re now sell­ing for—okay, you should prob­a­bly sit down for this—$1,793. Ama­zon’s price his­tory hasn’t fluc­tu­ated as dra­mat­i­cally, but even there the graphs don’t taper gen­tly down­wards, as you’d ex­pect to see with a graphics card over time.

Salt mines

Prices have been on the in­crease since mid-2017, but it wasn’t un­til De­cem­ber—well, af­ter Black Fri­day and Cy­ber Mon­day— that the fig­ures sky­rock­eted. The in­crease has been sharp enough that you can rea­son­ably ex­pect a fall some time soon; all bub­bles burst even­tu­ally. The fact this hasn’t hap­pened yet (as of late Jan­uary 2018) means that there’s never been a worse time to up­grade your graphics card, and, con­versely, never a bet­ter time to sell your used one—as long as it’s de­cent. It’s con­ceiv­able to even sell for a profit, which may well be a first since dis­crete graphics cards have in­hab­ited beige boxes.

Push­ing back any up­grade plans isn’t the only way cryp­tocur­rency min­ing is ham­per­ing your per­for­mance, though. There’s also ‘cryp­to­jack­ing’ to con­sider. With de­press­ing in­evitabil­ity, PCs across the world are be­ing tar­geted by covert web min­ing pro­grams that in­stall them­selves on un­wit­ting users’ ma­chines and do some min­ing for a ne­far­i­ous type on the other side of the globe. Even YouTube got in hot wa­ter lately when it was re­vealed that cer­tain ads they served con­tained these web min­ers. So if you no­tice your per­for­mance lev­els drop­ping, it might be worth run­ning a scan us­ing a trusted and up-to-date anti-mal­ware pro­gram. And if you’ve read all this think­ing min­ing sounds like a good idea, re­mem­ber: 1,367 years. Phil Iwa­niuk

In prac­tice it’s ac­tu­ally quite tough to make money solely from min­ing

LEFT: AMD’s sub-$500 RX Vega 64 now sells for nearly dou­ble that fig­ure at some re­tail­ers.

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