Cryptocurrency miners have spent over $15 billion on graphics cards in the space of 18 months. In August, however, the Ether update should put an end to the appetite of mining farms, as well as the shortage of GPUs.
Miners of Ether, the second most valuable cryptocurrency in the market, bought for 15 billion graphics cards since January 2021, says Bitpro Consulting, a firm specializing in the refurbishment of mining machines. This calculation does not take into account the costs of accessories such as wiring and transformers, underlines Bloomberg, which relays the information.
To mine Ether, mining farms continuously run powerful graphics cards. The mining of crypto-assets is indeed based on the computing power of GPUs. It is thanks to the components of Nvidia or AMD that the transactions of the Ethereum blockchain are validated. Miners receive financial rewards in exchange for their work. This is why the miners have taken over an important part of the production of graphics cardsto the detriment of individuals, in particular video game players.
“Overall, GPU prices rose by at least 300% across the board in mid-2021 as cryptocurrency prices peaked”relates Bitpro Consulting on its website.
In recent weeks, crypto miners’ gargantuan appetite for GPUs has drastically reduced. The collapse of the cryptocurrency market has caused a sharp drop in the price of Ether. After soaring above $4,500 in 2021, the price has plunged back below $1,000. This crash caused a sharp drop in the profitability of miners. Many of them have put their equipment up for sale on the second-hand market to bail out the coffers.
The End of Ether Mining… and the GPU Shortage?
The fall in prices is not the only factor that explains the massive sale of GPUs dedicated to mining. By the end of the year, Ether will be entitled to a major update to its protocol. This update, known as Ether 2.0, consists of migrating the cryptocurrency from proof of work to proof of stake. This change aims to reduce network energy consumption while improving security.
Once the migration is done, it will be almost impossible to mine Ether using GPUs. The mining community has been preparing for this major change for a long time. It’s also why a plethora of crypto miners sold off their infrastructure when the market crashed. Anticipating the end of their activities, they seek to recover money on equipment that will soon be useless.
This transition should therefore have an impact on the graphics card market. If some of the miners will turn to other cryptocurrencies, some infrastructure will inevitably disappear. Many individuals, who mine Ether at home, should also disregard mining. Questioned by Bloomberg, a minor residing in Ukraine regrets “an almost complete loss of a good source of income”.
Migration from Ether to Proof of Stake planned during August 2022. The developers of the Ethereum blockchain have decided to delay the update, presented as a bombshell of difficulties, for several months. This is already the 5th time the update has been postponed.
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