TECH REPORT
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