Analysis of the future trend of the graphics card market: Is it possible to buy the bottom now?

Original author: 0x49

A year ago, ETH was advancing all the way, and the market demand for graphics cards was extremely high. At the peak, it was a luxury to buy a new graphics card at the original price. If you want to own a graphics card, you can only go to the secondary market to accept a super high premium. But this can't control the miners' desire for the wealth effect. The supply of graphics cards is in short supply, and even the game books have been swept away.

The demand for graphics cards is rising, and the biggest beneficiaries are of course graphics card manufacturers. The profit of Nvidia, the world’s largest graphics card company, has long been fully linked to encrypted mining. Even though Nvidia has repeatedly tried to reduce the impact of mining on the graphics card market, in fact, the graphics card market has been affected by encrypted assets and has formed a certain cycle. As the price and market value of ETH continue to grow, its influence on the graphics card market is gradually increasing. Therefore, its price rise and fall also affects the graphics card market.

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ETH network computing power and price (2017.07-2022.07), source: OKLink

The Love and Hate of Graphics Card Vendors for Crypto Mining

For graphics card miners, the main concern is the ETH network situation (including difficulty, average computing power level), ETH price, graphics card price, graphics card computing power and other factors. For gamers and ordinary users, the main concern is the price and performance of the graphics card.

From the perspective of use, graphics card miners can afford a higher premium than ordinary users to buy graphics cards. Take the "dessert-level" graphics card GTX 1060 6G launched by Nvidia in 2016 as an example. The official price of its non-public version is 1999 yuan. But when the ETH mining boom came, the card was priced at more than 3,000 yuan for a long time, surpassing the price of Nvidia's sub-flagship graphics card GTX 1070Ti at 3,499 yuan. When the mining disaster came, the market was flooded with a large number of GTX 1060s with triple-digit prices.

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Steam June 2022 hardware and software survey, source: Steam

The upsurge of encryption mining can not only affect the price of graphics cards in the secondary market, but also affect the pricing system of manufacturers, which is unavoidable even if it is as strong as Nvidia.

For example, in September 2020, Nvidia released the "GeForce RTX 30 Series" graphics card based on the Ampere architecture. In the case of almost the same performance as the previous generation flagship product, the official price of RTX 3070 is 40% of the previous generation flagship card RTX 2080 Ti. While the performance of RTX 3080 has been improved by 40% on the basis of RTX 2080 Ti, the price is only 55% of the latter.

This is not that Nvidia wants to do "charity", but that encryption mining has broken down the business strategy and pricing mechanism. On the day of "3.12" in 2020, as long as players who have participated in cryptocurrency will never forget that the encryption market crashed instantly, blood flowed into a river, and ETH once reached $80. This also directly caused miners to sell graphics cards regardless of cost, and manufacturers' new graphics cards were slow .

graphics cycle

Accompanying this encryption bull market, Nvidia released the 30-series graphics card in 2020. Obviously, graphics cards go through their own cycles, too. The top graphics card on the market at that time was not only recognized by gamers, but also allowed miners to find new tools.

As a result, the secondary market prices of graphics cards took off sharply, and the epidemic led to insufficient supply and skyrocketing demand, and graphics cards became a hard currency.

We calculate from September 17, 2020, the official release date of Nvidia RTX 3080, that the computing power of the ETH network has increased from 234 TH/s to a maximum of 1266 TH/s.

What is the concept of the increased 1032 TH/s? If fully converted to 3080 (calculated at 100 MH/s), it is equivalent to adding 10.32 million graphics cards to the entire network for ETH mining.

However, with the end of the bull market, the original rush premium also reacted when the mining disaster came. In the second quarter of 2022, under the background that the computing power of the entire Ethereum network plummeted by more than 30%, the price of graphics cards finally fell below the original price. If it is converted into a graphics card, it is equivalent to 3.8 million 3080 graphics cards being shut down and entering the market.

In hindsight, the sharp drop in computing power or the shutdown of a large number of graphics cards has long been reflected in the slow sales of the primary graphics card market. As early as April 15th, JD.com launched the "Garden Graphics Card Price Guarantee 618, 180 days only for replacement but not repair" campaign, which is unprecedented. According to incomplete statistics from the media, JD.com only sold 900 copies of the 10G version of the 3080 during June 18. In addition to China, graphics cards in the US market are also unsalable. As early as the end of March, ASUS announced that starting from April 1, the company's 30 series graphics cards will cut prices by 25%.

There is another important reason why the 30 series graphics card is unsalable, and it is already at the end of the product life. According to the latest news, the 40-series graphics card may be officially released in Q4 of 2022 as soon as possible. However, judging by the fact that both Nvidia and AMD have cut orders from TSMC, sales expectations for new graphics cards may have declined.

30 series or will be the last batch of mining cards?

Judging from various news, perhaps the 30 series graphics cards will become the largest batch of mining cards.

The merger of ETH is expected to happen in September. After the merger is completed, the consensus mechanism of ETH will shift from PoW to PoS, and graphics cards will no longer be needed for mining. However, some miners believe that after the merger is completed, PoW mining will continue for a period of time, or ETH will be in a PoW+PoS coexistence mode, or miners are about to make ETH fork, so graphics card mining will continue for a period of time.

According to media sources, Nvidia is expected to launch only one flagship 40-series graphics card this year. Considering the cost-effectiveness and payback cycle, even if ETH PoW mining can continue, there will probably not be a large number of 40-series graphics cards involved.

Looking at the current encryption market, some projects such as distributed rendering and ETC may be able to undertake a small number of graphics cards, but obviously no single encrypted asset can undertake such a huge graphics card computing power.

Faced with such a large base of computing power and miner groups, there are already forces trying to fork. However, lacking the support of the masses, time precipitation, and bull-bear cycles, it is clear that this process will be a mess.

So is it possible to get it now? It would be a better choice to buy a cheap enough mining card or wait for the 40 series graphics card.