Graphics processing units (GPUs), which are used for mining ethereum amongst other cryptocurrencies, are becoming cheaper as the Ethereum network prepares to switch to a proof-of-stake (PoS) from proof-of-work (PoW).
The cost of a GPU has already dropped by as much as 70% since early this year and is expected to fall even further in the coming months, as ethereum’s long-awaited move to PoS nears.
This transition is likely to occur sometime in late 2022 or early 2023, and when it does it will render these computer parts virtually useless for those mining Ethereum.
The asking price for popular GPU models on eBay has dropped as much as 37% since May 2021, when Chinese authorities issued a renewed crackdown on crypto mining in the country according to data from Tom’s Hardware.
GPU prices have remained relatively high compared to other computer components. However, this could all change very soon, as the switch to PoS edges closer. Once that happens, the demand for GPUs is expected to drop sharply, leading to even cheaper prices.
Ethereum developers have been testing the PoS model throughout this and the price of the second-largest cryptocurrency has also fallen in recent weeks.
According to Tristan Gerra, managing director and senior analyst for semiconductors at investment bank Robert W. Baird, crypto mining accounts for about 35% of the consumer demand for GPUs globally.
With Ethereum’s switch to PoS, that number is expected to drop sharply. This, in turn, will lead to a significant decrease in the prices of GPUs. It is not just Ethereum that is moving to PoS. Several other major cryptocurrencies are also planning to make the switch in the near future.
Adding to the downward trend of GPU prices is the fact that Ethereum’s price has also been relatively low, coupled with the increased difficulty of mining. The price has picked up a little recently, but “there is still some distance to the previous peak,” said a spokesperson for f2pool, the second-largest Ethereum mining pool by computing power according to information platform MiningPoolStats.
At the same time, the difficulty of mining ethereum continues to rise, currently at around 2.4 trillion, which is a record high, according to data from Etherscan. This makes it harder for individual miners to find blocks and receive rewards.
The overall picture looks bleak for GPU miners, but there is still some hope. For one, the Ethereum Foundation has said that it is planning to reduce mining rewards.
Haohao, a sales rep from Xuxin Science and Technology said that the Ukraine-Russia conflict contributed to a decrease in crypto prices, which in turn made mining less profitable, and so GPU prices fell even more. Haohao further estimates that only 20% to 30% of crypto mining equipment that was in China has been sold after the crackdown.
With Ethereum’s switch to proof-of-stake, GPUs will become even less important for mining. This could lead to a decrease in prices, making them more affordable for gamers and other consumers. However, it is worth noting that proof-of-stake does not mean that mining will be completely eliminated; rather, it will just become less energy-intensive. So, even though GPUs may become cheaper, they will still be needed for Ethereum mining.
Do you think that the switch to proof-of-stake will lead to a decrease in GPU prices? Let us know in the comments below!