Between the recent crash in cryptos and an upcoming protocol change that will make it more difficult to mine Ethereum, the price of video cards has plummeted more than 50% in the used market, according to Bloomberg, citing RW Baird & Co. analyst Tristan Gerra.
Long popular with computer gaming nerds, these cards enjoyed a second life during the crypto boom as an essential component of the systems that generate digital coins. Even as Nvidia tried to limit its exposure to the industry, the crypto rally had helped send prices of the company’s products soaring on secondary markets like EBay. -Bloomberg
Gerra estimates that over 1/3 of the consumer GPU market could disappear as crypto mining enthusiasts ditch their plans, resulting in a flood of inventory on Ebay and other marketplaces.
"People don’t want to buy GPUs knowing it’s potentially going to be obsolete in two quarters," he said, adding "We believe that crypto-related purchases have steadily declined."
According to MarketSight, the price for Nvidia's GeForce RTX 3080 fell from $1,100 in late April to $793 on Ebay, which means gamers can finally scoop up a card.
Meanwhile, Reddit's "EtherMining" forum is a hot mess.
According to New Street analyst Pierre Ferragu, an Nvidia graphics card with a list price of $1,499 was fetching double that price during the peak mining frenzy - with some $3 billion worth of cards having been bought for mining since the beginning of 2021. "They are now flushing into the secondhand market," he added.
Nvidia expects to take a hit from reduced demand for GPUs - even though they had been trying to dissuade miners from soaking up inventory from gamers by employing hashrate limiters to reduce how quickly each card can mine.
Nvidia has already spent years struggling with how to handle the crypto industry. Though demand from miners has helped fuel sales, the vagaries of the market suddenly made results harder to predict. That came to a head in late 2018 when the company blamed a crypto retreat for a weak forecast. Nvidia warned that revenue would be hundreds of millions of dollars lower than Wall Street projected, sending its shares down 20% in just two days.
The company didn’t want a repeat of that scenario, so it made its gamer GPUs -- sold under the GeForce brand -- less effective at mining. It also released a card designed for the crypto market that can’t be used for gaming. The product lacks the hardware needed to connect to monitors. -Bloomberg
"The reduced pace of increase in Ethereum network cash rate likely reflects lower mining activity on GPUs," Nvidia Chief Financial Officer Colette Kress said during the company’s quarterly conference call last month. "We expect a diminishing contribution going forward."
CEO Jensen Huang has warned that while demand remains strong from gamers and data-center customers which use the chips to power AI, the company's days as in the crypto space are already waning.
"The underlying dynamics of the gaming industry is really solid," said Huang during last month's quarterly conference call.