Gone are the days of cryptocurrency miners and hardware manufacturers reaping the moolah amid the recent digital asset boom. As a result of the crypto price crash, mining of these digital assets has become unviable, leading miners to dump their high-end gear on the resale market, leading to a drop prices.
Example: Until a few months ago, if you needed a high-end graphics card, used to mine new bitcoins, it would have cost up to ₹2 lakh on the black market. Now, users can purchase the same cards online at their listed price of around ₹1.1 lakh per unit. That’s a 45% drop.
The crash in the price of graphics cards has been driven by the dumping of these high-end pieces of hardware on the resale market by the crypto community.
“Every week prices are falling,” said Vibhor Agarwal, managing director of Supertron, one of India’s largest hardware distributors. “The long-awaited price correction has started to happen.”
Cryptocurrency mining requires users to solve a complex set of problems on the computers they unlock or create new cryptocurrencies, such as bitcoins. These complex algorithms require high computing power to solve and miners usually use graphics cards designed for intensive games for this work. As prices crashed, cryptocurrency mining became unviable because the process itself is very expensive.
The sell-off of major cryptocurrencies began in April as global central banks began to tighten their balance sheets and raise interest rates. The ultra-accommodative monetary policies of central banks in the developed world, which have weighed on their currencies, have been one of the drivers of demand for cryptos, which has benefited from the perception of weaker supply.
Bitcoin, the most popular cryptocurrency, has fallen by a third since November 2021, from $61,000 to $20,789 now. Ethereum, another popular cryptocurrency, has fallen almost 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, in the midst of the crypto boom, several miners added new rigs to maximize their returns. A mining “rig”, which is essentially a bank of graphics cards assembled for mining, can contain anywhere from a few to dozens of cards.
As miners pull out of the market — and even dump the cards they own on the resale market — demand for graphics cards has surged to levels seen in 2019 before the start of the last crypto boom, according to Deepak Gupta , the national head of the graphics card manufacturer. Zotac Technology Limited.
“Long wait times for these pieces of hardware are a thing of the past,” Gupta said.
With lead times of up to 16 weeks in 2020 and 2021, Indian suppliers can now have them shipped within weeks of ordering. The cards are not made in India and the market is entirely based on imports.
Prices have moved closer to the manufacturer’s suggested retail price (MSRP) in the market. For example, a card containing an Nvidia RTX 3080 TI chipset sells for around ₹1.15-1.2 lakh in India, compared to the manufacturer’s MSRP of ₹1.11 lakh, Gupta said.
“The market is returning to its original shape,” he said.
Until earlier this year, demand for these graphics cards was such that their shortage fueled a war between miners and gamers. Gamers have claimed that miners are hoarding hardware designed specifically for gaming and excluding major users from the market. Now the players have the last word.