According to South China Morning Post (SCMP)on September 25, China saw prices of graphics processing units (GPUs), or graphics cards, tumble to the “lowest level ever” in the wake of Ethereum making changes to its blockchain that shifts crypto enthusiasts away from mining.
Last week, to enhance censorship resistance to the Chinese regime’s crackdown on cryptocurrency mining, Ethereum switched to a so-called proof-of-stake mechanism. The shift enables players to generate new ether by “staking” their crypto tokens.
And, this type of model also cuts power consumption by 99%. Thus, Chinese regulators can no longer spot Ethereum node operators by monitoring unusual electricity usage, as they do with the proof-of-work method in crypto mining.
SCMP noted that merchants in Shanghai’s electronics retail market used to readily triple retail prices of high-demand video cards on crypto miners, including those buying Nvidia’s GeForce RTX 3080, RTX 3080 Ti, and RTX 3090.
However, those days are gone since market prices have declined in the past few months.
A merchant named Peng, a graphics card vendor at the Buy Now market in Shanghai, complained that the RTX 3080 has slid to only around $700 (5,000 yuan) from $1,126 (8,000 yuan).
Peng said, “When the wave of bitcoin mining was at its peak, people from the mining companies just walked in the stores with cash and took away all the graphics cards we had in store.”
He added, “But now look at the stores. No one is buying new computers because of the coronavirus, not to mention those who want to install a new graphics card.”
According to SCMP, in the past, consumers only used GPUs for video gaming. Since the emergence of cryptocurrency, graphics card prices have grown rapidly in tandem with the crypto tokens. This is due to their exceptional capabilities in hashing, a complicated calculation in mining on proof-of-work blockchains.
Another seller by the name of Liu, the owner of a PC and component shop in the same market, said that the retail prices of lower-end RTX 3080 cards from manufacturers such as MSI and Colorful have declined by about $140 to $280 (1,000 to 2,000 yuan) over the past couple of months.
Liu said that one of his customers bought an RTX 3080 card for about $1,320 (9,400 yuan) late last year, and now he has to sell it for less than half that price, even though that specific model is not suitable for mining.
Not only offline retailers but online merchants also suffer from falling prices. Prices of RTX 3080 cards on e-commerce platforms such as JD.com and Taobao of Alibaba Group Holding have dropped a few hundred yuan since June.
SCMP reported that this year prices of both crypto and ether in China decreased by 72% from their peaks last November to $19,000 and $1,300, respectively. This has, in turn, dragged on consumer demands for GPUs.
Liu said graphics card prices have sunk to their “lowest point,” with some models having dropped below the recommended retail prices.
Wang Lei, another vendor of Asus graphics cards at the Buy Now mall, thinks the market prices have declined so much that they are now at or near their bottom.
He said, “It is already at the lowest level I’ve ever seen.”
Peng anticipates that Ethereum’s proof-of-stake method would cause a potential huge wave of consumers selling their used graphics cards and further disrupt the entire market in the time ahead.