Mining is stalling – video card prices are falling


Video cards are mainly used in the production of Ethereum, which has already adjusted by 60% from the highs of November 2021. Due to the fall in mining profitability, the long-awaited reduction in prices for video accelerators is fixed.

Over the past three years, the main investment force in the cryptocurrency market has been institutional investors – companies with investments of $1 million or more. In particular, we are talking about public mining companies with long-term investment goals.

The cryptocurrency boom of 2021 has prompted many of them to increase their activity in the arms race.

According to Digital Trends, miners accounted for 25% of all video cards sold or 700 thousand devices last year. This was reflected in the accelerated growth of the network’s hashrate, which has more than doubled over the past 10 months.

However, now there is a reassessment of the prospects for the growth of the cryptocurrency market due to the actions of the Fed and a decrease in the investment fervor of miners. For example, the already unsuccessful line of CMP (truncated video cards for mining) from NVIDIA (NASDAQ:NVDA) collapsed in sales to a “nominal level”, and the company’s shares surprisingly repeat the movement of Ethereum, losing 51% from the highs of November 2021.

The miners’ refusal to buy video cards had a favorable effect on the retail price of the latter. So, the RTX 3080 model on European sites costs in the range of $ 1000 – $ 1300, while at the peak the price reached $ 1800; and the entire third-generation series is already close to the recommended retail price.

Despite the correction of Ethereum, the complexity of mining continues to grow, and profitability continues to decline. Now, for 1MHash, miners receive an average of 2.4 cents per day, which is comparable to the level of mid-2020. The main earnings in the Ethereum network for miners are commission fees, but a decrease in activity has led to their cheapening. The exceptions were spikes due to the launch of a new NFT collection and the collapse of Terra (LUNA).

Since the external economic background for cryptocurrencies remains aggressive, it is assumed that the profitability of mining will remain at low levels, and the price of video cards will decrease by another 10-20% in the near future.