- As BTC and ETH rapidly lose value, many miners are forced to auction off hoarded GPUs.
- Some industry experts say mining a single BTC would now cost up to $25,000.
- Ethereum would move to a Proof of Stake model, meaning miners would no longer use GPUs.
For many years, bitcoin (BTC) mining has been a surprisingly lucrative business, with gross margins reaching 90%.
For the profitability of mining, three key factors are responsible: the price of BTC, high energy costs and IT hardware. Currently, the three factors contribute to the major distress of minors.
For example, BTC and Ethereum (ETH) rapidly lose value. The largest cryptocurrency by market capitalization once traded above $67,000 before falling prey to the overall market crash. BTC is now trading at as low as $20,430 at press time.
On the other hand, ETH is the most affected crypto, losing its price by 70% in a month and now trading at $1087.
These mining centers, similar to data centers, are energy-intensive and consume a lot of electricity. According to the Cambridge Center for Alternative Finance (CCAF), Bitcoin currently consumes around 110 terawatt hours per year, roughly equivalent to the annual energy consumed by countries like Malaysia or Sweden.
According to Daniel Jogg, CEO of Enerhash, a company operating blockchain data centers, energy prices have skyrocketed in parts of Europe, so mining one BTC would cost up to $25,000. .
Given these factors, miners have abandoned mining of Graphics Processing Units (GPUs). They are forced to auction graphics cards on online marketplaces at less than half the cost of GPUs.
Mass sale of graphics cards at auction
Crypto miners and internet cafe owners, who were involved in the mass purchase of graphics cards for mining, now just have to dump their GPUs or sell them for as little as $300-$350 .
GPU flooding is here.
Chinese miners and South Asian ecafes are now dismantling their mining rigs and auctioning cards on live streams.
3060 Ti costs between $300 and $350 US… pic.twitter.com/kphmIt7vZw
—Hassan Mujtaba (@hms1193) June 21, 2022
On Tuesday, images of mining networks flooded online on various Chinese internet service companies like Baidu which was for sale.
Graphics cards from AMD and NVIDIA were sold for more than half of their real cost. For example, the popular NVIDIA GeForce RTX 3060 Ti graphics card is now auctioned for $300, while the actual price was over $700-$800 a few months ago.
Users took to Twitter and other forums to advise buyers not to buy these GPUs as they were “overused for mining”.
A user on the 3D Geeks forum Noted,
“With the crash of the crypto market (Bitcoin, Ethereum as well as other cryptocurrencies), many graphics cards are now for sale by some of the biggest crypto miners (Chinese GPU miners, scalpers and internet cafes) at low price.price, below MSRP!Keep in mind that these graphics cards have been abused for mining for months, and it is not recommended to buy one.
However, enthusiastic gamers will still find these overused graphics cards useful and will buy them for the hefty price. According to a Bloomberg report, Ethereum miners spent around $15 billion on GPUs during the previous mining craze since 2021.
GPUs are no longer useful for mining
As Ethereum transitions from its proof-of-work mechanism to a proof-of-stake mechanism, many miners are unhappy, forcing them to find an alternative.
As reported by FX Empire, ETH announcement that it would move to the point of sale between the third and fourth quarters of this year. This is an important step as it reduces power consumption by more than 99%, good news for environmentalists and crypto critics.
However, ETH pushed this merger several times, disappointing expectations. Tim Beiko, a computer scientist who coordinates Ethereum developers, noted that the chances of that not happening this year are “very low.” He added,
“What I want to avoid is someone buying a mining GPU today, and the meltdown happens this summer, making it almost worthless.”