Gone are the days when crypto currency miners and the hardware makers raked in the moolah amid the recent boom in digital assets. In the wake of the crash in crypto prices, mining such digital assets has become unviable, resulting in miners dumping their high-end equipment in the resale market that has resulted in a crash in prices.
Sample this: Until a few months ago, if you needed a high-end graphic card, used to mine new bitcoins, it would have cost as much as ₹2 lakh in the black market. Now, users can buy the same cards online at their sticker price of around ₹1.1 lakh per unit. That’s a drop of 45%.
The slump in price of graphics cards has been driven by dumping of these high-end pieces of hardware in the resale market by the crypto community.
“Every week prices are falling,” said Vibhor Agarwal, chief executive at Supertron, one of the largest distributors of computer hardware in India. “The price correction which was much awaited has started happening.”
Cryptocurrency mining requires users to solve a complex set of problems on the computers post which they unlock or mint new cryptocurrencies, like bitcoins. These complex algorithms require high computing power to solve and miners usually use graphics cards designed for intensive gaming for this job. As prices crashed, mining of cryptocurrencies has become unviable since the process itself is very expensive.
The sell-off in major cryptocurrencies started in April as global central banks started tightening their balance sheets and raising interest rates. Ultra-accommodative monetary policies by central banks in the developed world, which weighed down their currencies, have been one of the drivers of the demand for cryptos, which benefited from the perception of lower supply.
Bitcoin, the most popular cryptocurrency, has shrunk to a third since November 2021 from $61,000 to $20,789 now. Ethereum, another popular cryptocurrency, has fallen nearly 70% since April to $1,203.
Mining cryptos is an expensive process. In addition to high-end hardware, it also consumes a lot of electricity. Two years ago, amid the crypto boom, several miners added newer rigs to maximise their returns. A mining ‘rig’, which is essentially a bank of graphics cards put together for mining, could contain anywhere from a few to tens of cards.
As miners pull out of the market – and even dump the cards they own in the resale market – the demand for graphics cards has reached levels seen in 2019 before the last crypto boom started, according to Deepak Gupta, the country head for graphics card maker Zotac Technology Limited.
“Long waiting periods for these pieces of hardware have become a thing of the past,” said Gupta.
From lead times of as long as 16 weeks in 2020 and 2021, now suppliers in India can get them shipped within a couple of weeks of placing an order. The cards are not manufactured in India and the market completely relies on imports.
Prices have come close to the manufacturer’s suggested retail price (MSRP) in the market. For instance, a card containing an Nvidia RTX 3080 TI chipset retails around ₹1.15-1.2 lakh in India, compared to the manufacturer’s MSRP of ₹1.11 lakh, Gupta said.
“The market is getting in its original shape,” he said.
Until earlier this year, the demand for these graphic cards was so much that their shortage fuelled a war between miners and gamers. Gamers claimed that miners were hoarding hardware designed specifically for gaming and pricing the primary users out of the market. Now, gamers are having the last laugh.