Crypto-miners are probably to blame for the graphics-chip shortage – The Economist

Secondhand graphics-card prices move nearly in lockstep with those of Ethereum


THE PAST year has been rough for gamers. Just as covid-19 brought in-person entertainment to a halt, the cost of graphics processing units (GPUs) needed to run computer games soared. Graphics cards like Nvidia’s RTX 3080, with a suggested price of $699, have fetched up to $2,400. When bricks-and-mortar stores get a few in stock, buyers queue up overnight.

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Prices for all types of chips have risen of late, for myriad reasons. Silicon wafers are scarce. Manufacturers have suffered disruptions. Scalpers use bots to buy up inventory. Chinese-made chips face American tariffs. And demand for personal computers is the highest since 2010.

Nonetheless, data from Keepa, a website that tracks Amazon listings, show that asking prices for GPUs have risen faster than have those for central processing units (CPUs). The data also suggest that miners of Ethereum, the second-largest cryptocurrency, are to blame for gamers’ woes.

GPUs and CPUs both perform calculations, but they are used for different purposes. GPUs are specialised chips that excel at matrix algebra, which is required for 3D graphics and machine-learning tasks like translating languages. They are also the best tool for mining Ethereum (though not bitcoin). In contrast, CPUs are more versatile, and handle most everyday operations.

In general, chips lose value over time as new, more powerful ones are developed. Technological gains have slowed since the 1990s, but CPUs still obey this trend. For example, a nine-year-old CPU like Intel’s Core i7-3770 sells for a third of its release price.

However, prices for GPUs have risen so much that even geriatric graphics cards, such as AMD’s RX580, have gained value. It was released in 2017 at a suggested price of $229, and is now listed at more than $700.

In theory, such appreciation could reflect the growing popularity of gaming and machine learning. However, secondhand market data suggest a different cause.

Since 2015 asking prices for six GPUs tracked by Keepa have moved in lockstep with Ethereum’s value. In late 2017 the currency’s first big rally coincided with a surge in listed GPU prices. Once the crypto bubble burst, GPU costs fell back to earth.

Another boom began last year. As Ethereum’s price rose from $107 in March 2020 to $4,400 last month, the value of mining hardware once again followed suit. In six months, the six GPUs’ listed prices climbed by 150%. Those of CPUs barely budged.

The GPU shortage has hurt data scientists and computer-aided-design users as well as gamers. Some relief may be on the way. Ethereum’s price is now 40% below its record high. GPU prices have yet to fall, but if history is any guide, they probably will soon. Moreover, Nvidia has tried to cripple its GPUs’ mining power, while promising to sell new cards targeted at miners. It is also cutting back on its output of older products to focus on newer ones.

However, without greater production, customising chips will not end the shortage. Nvidia’s RTX 3080 Ti, one of its first cards with reduced mining power, is listed on Amazon at double its suggested price.

Meanwhile, Ethereum’s overseers said in May that they will rejig its blockchain to require less computation, and thus less electricity. If implemented, this might lower GPU prices. However, as long as other cryptocurrencies, such as Monero, rely on power-hungry protocols that reward good GPUs, miners will pivot to different coins—and gamers will once again cry foul.

Sources: Amazon; Keepa; Coindesk; The Economist

This article appeared in the Graphic detail section of the print edition under the headline “Pay to play”