One of the common topics over the past year was the lack of GPU availability. We have all heard about it and many of us had to deal with it in one way or another. Basically the situation is that with the rapid price increase of crytocurrency there is an increased demand from miners to get involved, buy more cards and increase their profit potential.
Profits are determined by a number of factors and there are online calculators that help you find a balance between hash rate calculations and cost of electricity. This can give the user an idea as to how quickly they can turn a profit at any given point. From there they can determine profit potential and as with everything computer related, more is better. Of course variables like exchange rate (price) and mining difficultly to factor in and for the most part they go up in a predictable pattern.
The accepted answer is that cryptomining is negatively impacting the PC market. The target demographic is unable to purchase the products and when they can the price is inflated. This is basic high school supply and demand.
Of course, you can look at this from a variety of angles and the one I find interesting is from the hardware manufacturers.
For years hardware sites, like Hardware Asylum, have noticed a trend in the market where PC hardware is ahead of the software. This is something Darren brings up on the Hardware Asylum Podcast and it boils down to the fact that a 7 year old processor is powerful enough to run anything on the market today. Games are less reliant on CPU power and unless your system breaks there is no reason to upgrade. Video cards are a different story and have a different upgrade schedule.
The realization that upgrading every year wasn’t needed really put hardware makers in a scramble to create reasons for users to buy new hardware. During this time we had specialized overclocking motherboards along with the rise of Gaming specific hardware and elaborate marketing to make components attractive. In a way that worked however it was niche and sadly a motherboard maker is only profitable when pushing volume. While limited edition motherboards are pretty darn awesome the numbers just aren’t there.
Simply put, hardware makers were struggling, margins were down and in a way the entire PC market is to blame. Intel/AMD released super powerful processors, motherboard makers started building bulletproof motherboards to save on RMA costs and lazy game programmers focused on game consoles over PCs and killed the need for a high-end gaming computer.
Combine that with “bargain hunting consumers”, “cheap” OEM style PCs and the rise of powerful mobile devices and you have completely unsustainable market.
Remember at this point big hardware makers like MSI, ASUS, Gigabyte were surviving on Chinese demand. RGB LEDs?, Gold heatsinks. Ya, all of that is because the Chinese and emerging markets LOVE that stuff.
In 2014 there was a spike in Bitcoin price. For years it was hovering around $100 USD a coin but it sharply spiked to $1000 USD and started a mining craze. News outlets were reporting on it and more and more people started to get involved with the promise that your gaming PC could mine for these digital coins which equated to free money.
The demand was short lived and when the Bitcoin difficulty jumped enough to make GPU mining unaffordable miners started to diversify and ASIC hardware (specialized hashrate miners) took over. AMD GPUs are powerhouses when it comes to mining due to how many cores are available but, they are hot and require a lot of power to operate which makes GPU mining unaffordable.
Then something happened, May 2016 at the Dreamhack gamer gathering in Austin Texas NVIDIA CEO Jen-Husn Huang launched the GTX 1080 and Pascal GPU architecture. This new GPU was insane. It was super powerful with 2x the performance of previous generations and 3x the efficiency of the (then) current Titan X.
The key here is speed and power efficiency and once again mining cryprocurrency became viable again and by now alternative crypocurrencies like Litecoin and Ethereum were gaining in popularity. The major difference was that unlike Bitcoin they were not difficult to mine with a GPU and as a result miners spared no expense and starting buying up every 10 Series GPU they could find and even started pre-purchasing entire shipments of cards even before they were delivered.
So who is the real loser?
At the launch of Pascal very few hardware sites were able to acquire cards, the demand was too high. The cards were priced accordingly and given the excellent NVIDIA marketing engine there were thousands of people screaming “Take my money”. Cards were selling themselves, media samples were reallocated to sales and hardware makers started making money hand over fist once again.
Strangely enough, and to my disappointment, there was at least one YouTube channel that got so many Pascal cards that he started calling it out. “And we have yet another GTX 1080 in for review….” Overall the comment came off as ungrateful and reflects badly on hardware media as a whole.
Dare I say that NVIDIA saved the PC industry?
No, the only thing they saved was their board partners and I suspect things will get worse before they get better.
Pyramids are a difficult thing to talk about. People who believe in them will defend them because they have a position on the ladder. People at the top of the pyramid profit while scraps are send down the ladder until there is nothing left. The reverse happens when people in the middle use their position to make money. “Buy Bitcoin!” “Join my Bitcoin Mining Pool! or Mining Guild!” These are get more people involved, elevating the price and moving you up the pyramid. Well, in all actually it makes the pyramid taller. The only way to move up is to contribute (buying coins, mining coins, stealing coins and losing coins?)
Ponzi Schemes and Multi Level Marketing fall into this group and work much in a similar way. Don’t believe me? How many people reading this have been asked to sell Cutco and Amway??
Ya, thought so.
This gets me back to video cards and one of the limitations of GPU mining. As difficulty increases so do the memory requirements to mine. At low difficulties you can mine with 4GB of video memory however, with certain cryptocurrencies as the blockchain increases your system will run out of memory making the card worthless.
I have started noticing STACKS of used video cards listed on Ebay along with a handful of RMA units. Any guess to where these come from? Most RMA cards are mining rig failures that went in for warranty work, the miner can’t afford to be down so they buy a replacement and sell the RMA unit when it comes back. The stacks of cards are likely mining rigs that have shut down OR, extras that are now profit opportunities due to GPU price gouging. Either way they are miners taking advantage of the market wherever they can because gamers aren’t going to be selling them.
Sadly the custom PC market is still in a decline. Hardware makers are making profits once again and have started adapting to current hardware trends. At CES 2018 I saw a Gigabyte motherboard specifically designed for GPU mining with only a single 16x video card slot and 11 1x slots. It likely has UEFI tweaks to make running 11 GPUs easier and is all around a good response to current market demands. I have also noticed a lack of overclocking motherboards on display and some had removed it from their product lines completely.
There is also several major hardware events we will have to deal with.
- Cryptocurrency price crashes. We have seen this happening now and if crypto trading ever gets regulated the price will crash and eventually it will go away. When this happens there will be a FLOOD of abused mining hardware on the second hand market driving the cost almost to 0.
- New GPU from AMD/NVIDIA. When new GPUs are released the power efficiencies and increased performance will drive up demand. Miners will upgrade, gamers will upgrade and abused cryto cards will FLOOD the market with almost no value.
- Mining difficulty gets too high. Right now Bitcoin is too difficult to mine with a GPU, you’ll be chugging away for two years before you mine a single coin and even longer if your mining rig is slow. The current trend is to invest in mining alternative coins and trade those in for Bitcoin. This lead to the price spike while investors with real money buy in for a quick profit. Alternative coins are getting launched every day. We all know it is best to be at the top of the pyramid until people try to cash out and the house of cards comes crashing down. Eventually the fad will wear off, prices will stabilize and the demand for mining will go away. There might not be a FLOOD of old hardware but the damage will be done. Gamers will have migrated to different platforms, hardware makers will once again struggle to build products that people want and consumers will ultimately lose faith.
I do hate to leave an editorial on a low note so I will propose this. How can the industry turn things around? Virtual Reality seems like a good path. There are huge hardware demands associated with Virtual Reality however the demand isn’t there, too much data and not enough innovation.
Custom PCs are also a path. Gigabyte was showing some examples of how custom computers fit in the workplace, at home and in a gaming room. People need to get excited about what a custom computer can do over a mobile device or over an inexpensive PC. I’m not sure we are there yet and I suspect we will have about two years to figure it out.
Let’s get started!