Since late 2020, we all have been waiting on getting our hands on new GPUs for our rigs but the initial scarcity of the 3000 and 6000 series led to multiple issues as everyone wanted a new GPU during quarantine times where literally everyone in the world was building a PC to either work from home or help the younglings with their online classes, so that was definitely an interesting period as a lot of people sold their old GPUs in hopes of finding new ones. However, the situation became far worse when the Cryptocurrency bull- run started in December where everyone was heading out to their local honest sellers and buying GPUs in bulk to start up their new and shiny mining rig to get that Ethereum.
It has been 6 months since the start off the Cryptocurrency Bull-run and during this time we have had multiple market corrections with the most significant one in May. So is the GPU shortage about to end? Well, there are multiple factors that are in play.
Crypto Mining and the State of the Market
It is obvious that mining becomes far more profitable when the Crypto Market and Bitcoin in particular is doing well as that dictates the price of ALT-Coins, which includes Ethereum that is the most profitable coin to mine. For the most of this bull cycle, the profitably for a RTX 3070 tier GPU has been around $3.5-4.7. Miners were devouring any GPU they could get their hands on to during the first few months, but as the price kept getting cranked higher, less and less miners were inclined to pick up a RTX 3070 for Rs. 270,000 as the return on investment extended out to 296 days with an average of $6 per day. Yes, the mining profitability did go up to $15 per day but we have to consider the day to day rate. Therefore, overtime miners were buying less GPUs but there was still a considerable demand at any given rate because that’s how the free market operates.
At the moment, Bitcoin is still stuck around the $35,000 – 38,000 range and the overall trading volume is also considerably low; thus, the profitability will remain low until we either see a massive dump (which will temporarily increase the profitability) or we see another bullish run where transactions on the blockchain will be ample and consequently, miners will get reimbursed adequately.
However, EIP 1559 is something to be considered as the objective of this update to the Ethereum network is to make the Gas Fees more reliable and consistent while burning away ETH. This will reduce the mining profitability by 30-40% and this update is expected to come out on 14th of July. It is important to note that previously ETH mining was completely ending at the end of this year or early 2022 but the ETH 2.0 update has been pushed back to late 2022, so that will definitely continue the current situation unless the Crypto Market suddenly goes into a Bearish mode where BTC will reside under $30,000.
Production and Chip Shortage
Long story short, the GPU shortage isn’t changing until late 2022 at the very least with the current circumstances. Every industry that uses these Semi conductors is suffering this includes the gaming, automobile, and even the Smart Refrigerators industry. If by the end of this year, the Covid situation is brought back down with the vaccine rollouts, we may see a decrease in demand for PC components as people will resume their daily lives outside of Pakistan.
(Obviously, this doesn’t apply to Pakistan or India where no one cares about the SOPs or Vaccines)
If you have any GPU right now, hold on to it until the end of this year. EIP 1559 may drive a small population of miners to sell their GPUs and it may also reduce the demand from their end, but there are still a number of factors that will dictate both the price and availability. The same advice goes for those who are looking to buy a GPU right now, try to get a cheaper card that won’t bankrupt you when the market goes down and just wait your time out.