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End of GPU Mining? Crypto Crash Forces Miners To Sell Graphic Cards

Jimmy Khan

Jun 23, 2022 14:36


With gross margins as high as 90%, mining bitcoin (BTC) has been an incredibly profitable business for many years.

The price of BTC, high power expenses, and processing gear are three major elements that affect mining profitability. Currently, all three of these causes significantly increase miner distress.

For instance, the value of BTC and Ethereum (ETH) is declining quickly. Before succumbing to the general market slump, the biggest cryptocurrency by market cap had traded at $67,000. As at the time of publication, BTC is only worth $20,430.

The worst-hit cryptocurrency, though, is ETH, which has lost 70% of its value in a single month and is currently trading at $1087.

Similar to data centers, these mining operations demand a lot of electricity. The Cambridge Center for Alternative Finance (CCAF) estimates that the current annual energy consumption of Bitcoin is about 110 Terawatt Hours, or nearly equal to that of Malaysia or Sweden.

In some regions of Europe, the cost of electricity has increased to the point where mining one bitcoin may cost up to $25,000, said Daniel Jogg, CEO of Enerhash, a business that operates blockchain data centers.

These reasons have led to the abandonment of GPU mining by miners. They are compelled to sell graphic cards on internet auction sites for less than the price of the GPUs.

Crypto miners and operators of internet cafes who purchased large quantities of graphic cards for mining are left with no choice but to sell their GPUs for as little as $300–350 or dump them.

Over 50% of the real cost of AMD and NVIDIA graphics cards was charged for sale. For instance, the well-known NVIDIA GeForce RTX 3060 Ti graphics card is currently being auctioned down for $300 although it was originally around $700-$800.

Because these GPUs were "abusively utilized for mining," users on Twitter and other forums advised consumers not to purchase them.

"With the breakdown of the crypto market (Bitcoin, Ethereum, and other cryptocurrencies), a lot of graphics cards are currently being sold by some of the most significant crypto miners (Chinese GPU miners, scalpers, and Internet cafés) for low rates, below MSRP," one user on the Geeks 3D forum observed. It is not advised to purchase one of these graphics cards because they were illegally used for mining for months.

However, avid gamers would still find use for these overused graphic cards and purchase them at a discount. Ethereum miners have reportedly spent almost $15 billion on GPUs since 2021, according to a Bloomberg article.

For mining, GPUs are no longer useful

Many miners are unhappy that Ethereum is switching from its proof-of-work to proof-of-stake system, pushing them to look for an alternative.

According to Top1markets, ETH declared that in the third and fourth quarters of this year, it will switch to POS. It is a big milestone since it cuts energy use by more than 99 percent, which is excellent news for opponents of cryptocurrency and environmentalists.

However, ETH has repeatedly delayed this merging, frustrating hopeful parties. The likelihood of it not occurring this year is "extremely low," according to computer scientist and Ethereum developer Tim Beiko. The scenario he wanted to avoid was someone purchasing a mining GPU today, and the Merge occurs this summer, therefore rendering it useless.