Ethereum Merge Signals End to GPU Shortages, Not High Prices

Analysis Gamers might not have to fight cryptocurrency miners or pay high prices to get their hands on a GPU now, especially if they’re willing to buy an Nvidia 30-series or AMD 6000-series card.

Will this mean that prices fall as much as they have risen?

Ethereum’s move to proof-of-stake this month — an overhaul dubbed the merger — ended the need for people to mine the cryptocurrency and those based on it using powerful GPUs and similar accelerators. Instead, investors are now staking their Ether to facilitate transactions and ensure blockchain security. For this reason and others, the outsized demand we know for GPUs has quickly deflated. Electronics are now easier to obtain, as supply catches up with falling demand.

The glut of graphics cards is evident in packed storefronts at physical retailers, with high-end AMD and Nvidia gear now selling well below their MSRPs. Without much effort, you can now find Nvidia’s RTX 3090 TI, a card launched at an MSRP of $1,999 just six months ago, or AMD’s current flagship, the RX 6950 XT, in sale for less than $1,100.

More modest cards such as the 3060 TI or RX 6700 XT are now readily available at prices close to their MSRPs, which in many cases we didn’t even see at launch thanks to the almost immediate price increases driven by a hungry GPU market. Remember that soon after its debut, the 3060 was selling for more than double its MSRP, if you could find one in stock.

“I think the reality is that prices are still quite high compared to what they have been historically, but overall I think compared to the last two years it’s much better,” said Anshel Sag, analyst at Moor Insights and Strategy. The register.

The Collapse of Crypto Mining

Early this summer, amid economic anxiety and other effects, cryptocurrencies began to tumble, with Bitcoin falling from over $48,000 in March to under $19,000 in June. Other popular coins that required proof-of-work mining, especially Ethereum, experienced similar meltdowns.

But when Nvidia recorded a $1.32 billion inventory charge in early August, it wasn’t cryptocurrencies that CEO Jensen Huang blamed, but plummeting PC sales.

“Our gaming product sales projections declined significantly during the quarter,” he said at the time. “As we expect macroeconomic conditions affecting sales to continue, we have taken action with our gaming partners to adjust pricing and channel inventory.”

Similarly, when AMD released its second-quarter results in August, executives revealed a drop in demand for discrete GPUs and warned that PC and gaming sales were likely to take a hit in the third quarter due to the weak demand.

But while both companies have lamented the drop in PC sales, Sag doesn’t see it, at least not among computer game fans. “I don’t see a lot of demand backing off from gamers. On the contrary, I would say that a lot of gamers are more interested in building PCs now than they have been in the last couple of years,” we he said.

Instead, Sag suspects Nvidia and AMD of downplaying the impact of cryptocurrencies on their sales. “Crypto has such an insatiable demand for GPUs that the whole channel evaporates almost instantly,” he said. “When you have that kind of experience, everyone feels like they’re printing money.”

But the risk is to make a bad bet on when the inevitable crash will happen. Historically, sellers have been caught off guard by these periodic crashes, but this time they should have seen it coming, Sag said.

That’s because it wasn’t just another near-miss. This was Ethereum’s transition from proof of work – what GPUs are used for – to proof of stake.

“It’s a double whammy. It’s that the price of crypto has dropped so much that it’s no longer economical to mine on GPUs, and then the most popular and profitable way to mine has also disappeared overnight,” said Wis.

Good for gamers?

The crypto meltdown may have hurt partners AMD and Nvidia, but Sag ultimately sees the situation as a “net positive” for gamers. And while prices and availability of existing GPUs may improve, not all cards are getting cheaper.

Nvidia’s shiny new GeForce RTX 40-series cards have been met with a mixture of anticipation over their bold performance claims and a general sense of disappointment over their price tags. Cards start at $899 and, for now, top out at $1,599. And according to Sag, Nvidia has little incentive to reduce GPU prices in future cards in the future.

“Nvidia is positioning the GeForce line like Apple has in the sense that the majority of what they sell is at the premium level,” he said. “They’re not necessarily trying to lower their price because they see themselves as a premium product in the market.”

For Nvidia, it might not be a bad game, he said, because people who can afford to spend more than a thousand dollars on a GPU are the least likely to feel the brunt of a slowdown. economic. “That’s why you see a lot of luxury brands continuing to do well even when other brands are saying, ‘we’re seeing a drop in sales’.”

This focus on the high end of the gaming GPU market could also be an opportunity for AMD to increase its market share. The chip designer is expected to unveil its upcoming RDNA-based graphics cards later this fall.

And while the Ryzen giant hasn’t given any guidance on pricing, Sag says AMD is in a position to “take stock of what’s happening with Nvidia and the broader GPU market and make decisions that will not only benefit consumers, but also potentially”. benefits AMD’s market share.”

Whether or not that means lower prices for AMD cards remains to be seen. ®

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