Cryptocurrency Trend: How GPU Shortage Is Affecting The Mining?

Cryptocurrency Trend: How GPU Shortage Is Affecting The Mining?

Cryptocurrency has gone mainstream over the last few years, with currencies like Dogecoin and Bitcoin skyrocketing in value and being endorsed by famous figures like Elon Musk. However, all this attention comes with a set of unique complications.

In 2018, the Graphics Processing Unit (GPU) market was severely hit by a stock shortage and an unusual rise in price overlapping with a surge in Bitcoin and Ether’s value. This resulted in Nvidia selling its GTX 10 series, Vega line-ups, and AMD’s Radeon RX for almost twice their initial price.

More recently, the GPU market witnessed a resurgence in this phenomenon, with shortages becoming even more severe than before, coinciding with a leap in the value of popular cryptocurrencies.

But how do cryptocurrencies affect GPU demand, a product that’s popular among gamers? The answer to this lies in crypto mining, an integral part of the blockchain world.

What is Crypto Mining?

In a cryptocurrency network, mining is a process through which every transaction is validated. Cryptocurrency ‘miners’ are either individuals or companies that form a decentralized network of processing power by utilizing their GPUs as servers to mine the currency. In order to mine, GPU clusters the most recent cryptocurrency transactions into ‘blocks’ and then, by using the Secure Hash Algorithm (SHA), validates the transactions. The speed at which this entire process is completed is usually measured in Hashes per second (H/s) or the Hash Rate.

Every successful validation leads to a small portion of the currency being rewarded to the miner as an incentive. Meaning, the more processing power a miner possesses, the more they can mine and the larger reward they can bag. Graphics Processing Units are super-efficient in completing these processes—even efficient than the CPUs. Hence, high-end CPUs are purchased almost as soon as they are in stock.

Currently, the interest in crypto mining is so at its peak that cyber cafes and service farms as far as China and Iran have been transformed to mine cryptocurrency, and the trend keeps going. The “digital money” and now modern mining rush is on everyone’s radar. You can invest it in many ways, trade it for real cash or use it on wages on some of the best bitcoin sportsbooks around with the opportunity to increase even more the profitability of the crypto currency. .

The Crypto Mining Processors (CMP)

The rising demand for GPUs proved to be profitable for companies even when they are facing shortages. Nvidia’s Q4 2021 earnings reported that cryptocurrency, particularly Ethereum, miners contributed between 100 to 300 million of their five billion US Dollar revenue. Nonetheless, the massive consumer base is still primarily the gaming community, which is vocally displeased about the stock shortages.

To address this issue, Nvidia is releasing a driver update with their new RTX 3060 GPUs, allowing the cards to detect the Ethereum mining algorithm automatically and reduce GPU capabilities by nearly 50 percent when in use. The organization hopes that this would discourage the miners from buying GPUs and instead have them turn towards their product line-up—the Crypto Mining Processors (CMP).

The brand-new CMP line-up highlights four models of tailor-made processors that mine Ether and are evidently different from Nvidia GPUs’ Geforce brand. The new CMPs don’t feature the display outputs and are capable of better airflow when used for mining. This, in turn, allows them to be more densely packed.

Additionally, these processors have a lower peak core voltage and frequency, which results in improved mining power efficiency and a higher Ethereum Hash Rate of up to 86MH/s.

Final Thoughts

According to Colette Kress, CFO of Nvidia, the company aims to cater directly to the industrial miners who prefer the optimized CMPs, with predicted sales of around 50 million in Q1 2022. Nevertheless, Nvidia is also planning to efficiently push amateur Ethereum miners to invest in an additional GPU by disabling their upcoming consumer GPUs from mining Ether. This move will discourage new, non-industrial miners from entering an already expensive arena.

On the other hand, Nvidia hasn’t spoken about any plans to prevent other cryptocurrency mining software from running on their GPUs. This could potentially lead to yet another shortage.