Ahead of The Merge on September 6, the price of graphics processing units (GPUs) for computers continuously dropped. Notably, the demand for computer cards by miners has already plummeted when the cryptocurrency market entered a bleak period.
The Merge is a hugely anticipated milestone in the crypto community. Through the upgrade, the Ethereum network will move from Proof-of-Work (PoW) to Proof-of-Stake (PoS), thereby improving scalability and reducing energy consumption.
The Bellatrix update will be conducted at 6:34 pm on September 6 (Vietnam time). After that, the Paris upgrade will take place between September 10-20 to complete the process of The Merge.
As the event of The Merge approaches, not only the cryptocurrency market but also the price of computer graphics cards are strongly affected. This is not surprising because cryptocurrencies are gradually increasing in popularity.
Besides, these GPUs are also an important “tool” when mining. According to the Pow mechanism, miners will use computer power to mine tokens. Therefore, the graphics card is an indispensable component.
Now, as The Merge draws near and Ethereum is about to say goodbye to the old PoW mining mechanism, GPU prices continuously record a downward trend.
In the past, the uptrend market always pulled the price of GPUs up. When Ether (ETH) peaked in 2021, some of the top graphics cards retailed for 114% more than the original manufacturer price. Since 2015, GPUs have always been associated with token mining on the Ethereum PoW network.
But that was the story before The Merge. Once Ethereum moves to PoS, the tens of millions of GPUs that ETH miners have purchased over the past 4 years will become “useless”. Some miners are considering switching operations to Ethereum Classic. However, the protocol has not yet generated the buzz needed to attract many decentralized applications like NFT or DeFi despite being around for almost 6 years.
According to analyst Jon Peddie’s data, overall GPU orders fell 15% QoQ. Part of the reason is that the PC market is weakening. International data company IDC forecasts that upcoming GPU prices will drop 12.8% year-on-year.
Data from GPUTracker.eu shows that the prices of some of the top GPUs are falling by double digits. The RTX 3080 Ti, a once-favorite miner, saw an average price drop of 45% last quarter. This price has come close to the price at the manufacturer. In February, a card of this type sold for about $ 2,000. Now, buyers only need to spend 1,100 USD.
In China, distributors are facing a “dilemma”. On the one hand, inventory is still piling up. On the other hand, the “coin mining camps” stopped importing more goods because there was no longer demand.
Nvidia, a multinational corporation specializing in developing graphics processors, feels this shift best. The company said that revenue from GPUs used for gaming and mining fell 33% to $2.04 billion. This decrease exceeded the company’s management’s expectations. Sales of dedicated mining cards also plummeted. However, this does not have a significant effect because in practice, miners often prefer to use GPUs for games.
Nvidia executives are even more optimistic. Jensen Huang, CEO of Nvidia, said that miners always “win” the graphics card with gamers or other users.
“The gaming industry is growing, the workstation is growing, the AI superfast data center is evolving, the high-performance computing is evolving. Honestly, I want our GPU to be built for use in those areas,” he said at the company’s 2018 tech conference.
With this view, perhaps Nvidia will find a way out of the crisis. For now, they just need to be persistent enough to get through a couple of quarters with somewhat declining revenue. However, it is certain that the price of computer cards will be difficult to recover immediately when the demand for mining coins decreases and the COVID-19 pandemic has passed.