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Is GPU mining profitable after the Ethereum Merge?

The Ethereum merge is the upgrade from proof-of-work to proof-of-stake as a way of validating block transactions on the network.

What is the future of GPU mining?

The future of GPU mining depends upon miners’ willingness to continue mining alternative GPU mineable cryptocurrencies. 

Mining, the foundation of PoW cryptocurrencies, may continue to flourish, given that energy costs are low for GPU miners. Moreover, the application of graphics processing units beyond mining, including graphics designing, gaming and video editing, make them ideal for fixed capital investment. 

Also, when one blockchain migrates to alternative consensus algorithms, GPU miners can utilize their rigs to mine other cryptocurrencies. This implies that GPU miners can continue using their mining rigs during events like the Merge, unlike application-specific integrated circuit (ASIC) miners, as ASICs cannot be repurposed to mine alternative cryptocurrencies. 

On the contrary, compared to GPUs, ASICs are more energy-efficient and offer a higher hash rate, inducing miners to switch to application-specific integrated circuit equipment. However, the cost of setting up an ASIC mining rig makes it unattractive to solo miners.

Above all, the equipment a miner chooses should be supported by the blockchain on which they will be mining cryptocurrencies. Other factors determining mining profitability include electricity costs, block reward, hash rate and cryptocurrency price that a miner is looking to mine, which must be taken into consideration before buying GPUs, CPUs, ASICs or any other mining equipment.

Can miners migrate to the PoS version of Ethereum?

Miners may change their business model to proof-of-stake consensus. 

It is difficult for Ethereum supporters to abandon the chain due to the Merge and the possibility that it could render mining on Ethereum ineffective. However, decentralized finance (DeFi) staking has gained the interest of such people because of higher payouts, as fees that were formerly paid by the blockchain to miners will shift to validators.

More technical upgrades, revisions and forks will follow the Merge, according to Ethereum cofounder Vitalik Buterin. For instance, Ethereum Foundation intends to introduce and refine sharding and rollups on the blockchain, which will positively impact transaction speed and gas fees. 

Additionally, Ethereum core developers hope to simplify data storage on the blockchain with the Purge and the Verge. The Purge is a technical improvement that will reduce storage space for storing Ether on a hard disk. This will eliminate the need for nodes to keep transaction history and simplify the Ethereum protocol.

Another concept called the Verge, which is an implementation of Verkle Trees as a sort of mathematical proof, will allow any Ethereum user to become a network validator, as they won’t need extensive disk storage to keep vast amounts of block data. 

Large-scale miners may adopt a data-focused strategy and engage in high-performance computing. For example, GPU miners could gain from Web3 protocols like Livepeer and Render if they can pool resources. Nonetheless, a considerable concern is still in the air of imminent Ether (ETH) selling pressure.

An Ethereum GPU miner can invest more in what they already have and explore other emerging technologies like artificial intelligence (AI), cloud computing and others. Furthermore, the GPUs can be repurposed for cloud computing without necessarily having to add more investment. For example, Hut 8 Mining, which has over 180 GPUs, is already refurbishing its Ethereum data center for machine learning, AI and engineering purposes.

What are the alternative options for Ethereum miners?

The Merge forced miners to shift to alternative GPU mineable cryptocurrencies, a newly forked version or dump or sell their equipment at a low price.

Shift to alternative GPU mineable cryptocurrencies

One of the direct effects of the Merge includes miners turning to the Ethereum fork, Ethereum Classic (ETC), to keep utilizing their equipment. For instance, the blockchain fork’s hash rate increased the day after the Merge. The hash rate describes the computation power needed to approve a transaction on the blockchain through a proof-of-work consensus mechanism. 

As Ethereum Classic blockchain still practices the PoW method for mining, Canada-based Hive blockchain (crypto mining giant) disclosed its plans to mine other proof-of-work cryptocurrencies like ETC, Dogecoin (DOGE) and Litecoin (LTC), among others. However, shifting to a PoW blockchain may undermine the environmental benefits that the PoS version offers.

Ethereum miners can switch to a newly forked version

A Chinese miner who resists Ethereum Network’s shift to proof-of-stake forked Ethereum to preserve the proof-of-work consensus method. The newly forked version is called the EthereumPOW (ETHW), which hopes to accommodate GPU miners in the future.

The trade of tokens reflecting a proof-of-work fork of Ethereum is supported by cryptocurrency exchanges like Poloniex and BitMEX as well as the Tron blockchain.  

Some of the GPU miners may quit the game

Returning to past revenue figures that were provided on Ethereum is difficult. Those chances are low with stablecoin chains or any other PoW blockchain. Overflow of hash rate to alternative GPU mineable coins is also a threat to the mining venture. 

It is challenging to earn previous rewards that were offered on Ethereum, due to which miners started shifting to alternative GPU-mineable coins. However, the increased hash rate means a hike in mining difficulty, causing miners to get rid of GPU miners. 

Hive blockchain agrees that only miners with efficient equipment will succeed in the long run for this reason. As a result, many miners may sell their GPUs if the difficulty of alternate chains keeps increasing.

On the other hand, the selling may not occur since a dumping effect will result from an increasing supply of GPU capability compared to a decrease in demand. Therefore, the likely outcomes of such a scenario can be a vast majority of miners either dumping or selling their equipment at low prices. However, as crypto mining places a lot of strain on the GPU hardware, gamers and even film editors might not be optimistic about buying the machines.

What are the pros and cons of GPU mining?

Using a GPU for mining offers both benefits like scalability and faster processing but with drawbacks such as complex setup processes, maintenance and electricity cost.

GPU mining is inherently more powerful than central processing unit (CPU) mining, as graphical processing units can handle the same calculations faster. In addition, the system’s power can be enhanced by using extra graphic cards, making GPU mining a scalable alternative to CPU mining.

The more advanced GPUs come with gaming, video editing and machine learning support, giving them the versatility to speed up various applications outside of typical graphics rendering. For instance, graphical processing units can render 2D and 3D graphics, allowing gamers to play at larger resolutions.

Similarly, since GPUs have a staggering amount of computational power, they can significantly speed up applications like image recognition that benefit from their highly parallel architecture. In computing, GPU parallel processing refers to the simultaneous execution of numerous calculations or processes.

Nonetheless, the process of setting up a GPU mining rig is quite complex, which involves downloading and configuring software that supports GPU mining, signing up for a mining pool, and creating a worker (mining device’s name that serves as the login for mining software).

Moreover, unexpected errors can cause defects in the equipment, which poses a financial burden on the miner. Also, the cost of electricity may not be covered by the reward (amount of cryptocurrency) earned in return for providing computing power.

What does the Ethereum Merge mean for Ethereum mining and GPU miners?

Ethereum upgraded from proof-of-work to proof-of-stake, meaning miners will be out of work, and their equipment will be useless.

GPU miners are individuals that validate transaction blocks by using specialized graphics cards to solve challenging mathematical challenges. Miners use graphic cards because they can quickly and repeatedly divide and process tasks that need a lot of energy and resources. 

However, Ethereum’s prolonged plan to reduce energy consumption by 99% by phasing out cryptocurrency mining was completed on Sept. 15, raising concerns about existing mining equipment. For instance, it may result in an accumulation of e-waste brought on by increased useless mining rigs, which could trigger another climate emergency, ultimately offsetting the advantages of the switch to the proof-of-stake (PoS) consensus mechanism.

Unlike proof-of-work (PoW), where several computers act as nodes and validate a single block, randomly selected validators create new blocks in PoS. In the long term, this renders thousands of graphical processing unit (GPU) rigs useless, making Ethereum mining less economical than it has previously been.

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Top 3 reasons why Bitcoin hash rate continues to attain new all-time highs

Bitcoin miners continue to take advantage of the falling GPU prices to upgrade their mining equipment as they aim to remain competitive in the fierce competition.

Throughout the month of October, Bitcoin's (BTC) hash rate surged by 10.8% as it recorded new all-time highs on a daily basis. While the increase in hash rate ensures greater security for the Bitcoin network, multitudes of factors contribute to the metric.

Falling GPU prices

Hash rate relates to the computing power required by Bitcoin miners to mine a block. As a result, a higher hash rate demands stronger mining rigs that could help miners mine a block and earn mining rewards.

As global markets recovered from chip shortages in 2022, the prices of the graphics processing units (GPU) — a key component of mining rigs — came down to a reasonable value. Lower GPU prices initially helped miners offset their operational costs amid an ongoing bear market.

GPU pricing update as of September 2022. Source: Techspot

Bitcoin miners continue to take advantage of the falling GPU prices to upgrade their mining equipment as they aim to remain competitive in the fierce competition. Moreover, major crypto firms such as Grayscale have also revealed plans to invest in Bitcoin mining hardware.

Increasing crypto-friendly jurisdictions

Ever since China imposed a blanket ban on crypto trading and mining, other countries decided to help out the misplaced Chinese miners by providing a safe haven in their own jurisdictions.

Countries including Kazakhstan, Canada and Germany, among others, were among the first choices for Bitcoin miners when it came to relocating their mining operations. As a result, Bitcoin mining became more decentralized as it grew less reliant on China.

However, data from Cambridge Centre for Alternative Finance showed that China resumed its mining operations just 3 months after the ban was imposed, further contributing to the rise in Bitcoin’s hash rate.

The United States currently tops as the biggest contributor to Bitcoin hash rate, with Georgia leading the drive at 30.8%, followed by Texas (11.2%), Kentucky (10.9%) and New York (9.8%).

The Merge: Ethereum’s transition to proof-of-stake (PoS)

Ethereum (ETH) recently transitioned from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism following the Merge upgrade. As a result, Ethereum no longer supports the use of GPUs for mining operations.

The sudden shift in mining mechanism naturally forced Ethereum miners to sell off or repurpose their equipment towards mining Bitcoin.

Despite the increased network security, the rising hash rate can become a cause for concern as mining revenue in terms of the US dollar struggles to recover amid the ongoing bear market.

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Hive Blockchain explores new mineable coins ahead of Ethereum merge

Hive's Ethereum mining operations have historically generated three to four times more revenue per megawatt than Bitcoin mining, the firm said.

Cryptocurrency miner Hive Blockchain has been working to replace the mining of Ether (ETH) with other coins in the event of Ethereum’s upcoming transition to proof-of-stake, or PoS.

The Canadian crypto mining firm has been analyzing options for mining with its GPU stash ahead of the Ethereum Merge, Hive said in its latest production update on Tuesday.

According to the update, Hive started implementing beta-testing of various GPU-mineable coins this week as the Ethereum Merge PoS is expected to occur in mid-September. Hive’s technical division is specifically implementing a strategy to optimize its Ethereum mining capacity, which amounts to 6.5 terahashes per second.

“The company acknowledges the potential Ethereum Merge to Proof of Stake,” Hive said in the update. It noted that it sees a competitive landscape where the GPU miners with the most efficient equipment and lowest cost of electricity will prevail.

Hive mentioned that its Sweden-based Boden facility is one of the largest Ethereum mining sites in the world, with power fixed at approximately $0.03 U.S. dollars per Kilowatt hour. “Hive is well positioned to navigate the market ahead,” the firm said.

Additionally, Hive noted that its Ethereum mining operations have historically generated three to four times more revenue per megawatt than Bitcoin (BTC) mining. The company has been selling its mined Ether to fund expansion of the Bitcoin mining program with a new generation of Application-Specific Integrated Circuits. Hive still held 5,100 ETH as of Aug. 31, 2022.

Hive has also continued to hold its Bitcoin stash, accumulating a total of 3,258 BTC by the end of August. According to the update, Hive mined 290.4 BTC last month, producing more than 9 Bitcoin per day even after the Bitcoin difficulty increased on Aug. 28. As previously reported, Hive has been among the few crypto mining companies that have opted to hodl their mined BTC during the ongoing crypto winter of 2022.

Related: Ethereum Merge to ‘swamp’ other coins with miners — Mining CEO

The news comes amid the approaching Ethereum Merge, a long-awaited Ethereum upgrade that is set to move its blockchain from mining-based proof-of-work (PoW) to mining-free PoS. On Tuesday, the Bellatrix upgrade went live on the Beacon Chain, or the network’s PoS chain, marking another move forward to Ethereum Merge.

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Not just Bitcoin price: Factors affecting BTC miner profitability

As many crypto holders are gearing up for a bear market, what are the factors influencing the mining business?

The ongoing cryptocurrency bear market has triggered a massive decline in Bitcoin (BTC) mining profitability as BTC mining expenses outpace the price of Bitcoin.

Closely tied to the drop in the BTC price, Bitcoin mining profitability has been tanking since late 2021 and reached its lowest multi-month levels in early July 2022.

According to data from crypto tracking website Bitinfocharts, BTC mining profitability tumbled to as low as $0.07 per day per 1 terahash per second (THash/s) on July 1, 2022, touching the lowest level since October 2020.

The decline in BTC mining profitability has caused some big changes in the crypto mining industry.

Lower Bitcoin prices fueled selling pressure as miners were pushed to sell their BTC to continue mining and pay for electricity. The majority of big crypto mining firms like Core Scientific had to sell a significant amount of Bitcoin in order to survive the tough market conditions.

The growing unprofitability of BTC mining has also triggered a big drop in demand for crypto mining devices, causing many miners to sell their mining hardware at a discount.

As lower prices of application-specific integrated circuit (ASIC) miners and graphics processing units (GPU) may drive more interest from new miners, it’s crucial to remember that the price of mining hardware is just one out of many factors behind BTC mining profitability.

What is Bitcoin mining profitability and how is it defined?

Bitcoin mining is an economic activity that involves the production of the digital currency Bitcoin using the computing power of GPU-based miners or specifically-designed ASIC miners.

Bitcoin mining profitability is a measure defining the degree to which a Bitcoin miner yields profit based on a wide number of factors, including the price of Bitcoin, the mining difficulty, the cost of energy, the type of mining hardware and others.

Factor 1: Bitcoin price and block rewards

The price of Bitcoin is one of the most evident factors impacting the BTC mining profitability as the value of BTC is directly proportional to profits yielded by miners.

Bear markets trigger even more attention to BTC price from miners because they risk losing money if BTC drops below a certain price level.

Miners should also take into account the amount of the block reward or the amount of BTC given to miners for mining one block on the BTC blockchain. Bitcoin’s original block reward amounted to as much as 50 BTC before it was cut to the current 6.5 BTC following three historical block reward halvings.

Bitcoin halvings are a major part of the BTC protocol, aiming to decrease the quantity of the new coins entering the network by cutting the block reward in half every 210,000 blocks or approximately every four years.

Factor 2: Bitcoin mining hardware characteristics

Bitcoin mining profitability largely depends on the choice of a BTC mining device and related characteristics including hash rate, power consumption and price.

Hash rate is the processing power of a miner, measured in hashes per second (H/S). Higher hash rates include representations in kilohashes per second (KH/S), gigahashes per second (GH/S), terahashes per second (TH/S), exahashes per second (EH/S) and so on.

A miner’s hash rate is the speed at which it can solve crypto mining puzzles to mine Bitcoin. The faster the speed, the more BTC is mined in a specific timeframe. As the BTC hash rate is constantly breaking new highs, Bitcoin miner manufacturers regularly produce new mining devices supporting higher hash rates, while older miners apparently become obsolete over time.

Another important feature of a BTC mining device is the energy consumption. With rising global energy costs, a miner’s ability to consume less energy is essential.

The price of actual mining devices is also an important expense when calculating the BTC mining profitability. Both GPU and ASIC miners got cheaper amid the bear market this year, but brand new flagship miners still cost more than $11,000 at the time of writing.

Factor 3: Mining difficulty and hash rate

Bitcoin mining difficulty is a measure of how hard it is to mine a BTC block, with a higher difficulty requiring additional computing power to verify transactions and mine new coins.

Network difficulty has been rising in 2022, continually breaking new all-time highs. Bitcoin’s mining difficulty adjustment occurs every 2,016 blocks, or about every two weeks, as Bitcoin is programmed to self-adjust in order to maintain a target block time of 10 minutes.

The Bitcoin hash rate is another fundamental metric for assessing the strength of the BTC network, as a higher hashrate means more computing power is required to verify and add transactions to the blockchain. This also makes BTC more secure because it would take more miners as well as more energy and time to take over the network.

Factor 4: Electricity costs

The price of electricity is another important factor when calculating the profitability of BTC mining.

Miners consider electricity prices in various countries in compliance with local crypto mining regulations. As mining activity puts extra stress on a power grid, it’s important to double-check local requirements and specific energy prices for powering BTC miners in this or that country or region.

Bitcoin mining can be powered by many energy sources, both renewable like wind and solar and nonrenewable sources including fossil fuels like coal, oil and natural gas. Amid soaring energy prices caused by recent supply issues, miners should pay special attention to possible implications on BTC mining income when using nonrenewable energy.

Factor 5: Pool fee if not mining solo

Many Bitcoin miners prefer to join mining pools instead of working as individual miners. That is a way to combine their computing power and increase the chances of finding a block and mining BTC faster.

Pool miners should be aware of another small expense that is taken by pool admins that set up the software for this type of mining. The fee is generally 1-3% of the miner’s individual reward, depending on the pool.

Factor 6: Other expenses

Bitcoin mining expenses are not exclusive to ASICs and GPUs and network indicators. BTC mining may also require some additional investment related to the physical mining setup, including facilities and property that are a good fit. Significant expenses may include cooling or noise canceling equipment as some miner machines are associated with a massive amount of heat and noise pollution.

Crypto mining calculators

One of the easiest ways to calculate Bitcoin mining profitability based on all the listed factors is using online BTC mining calculators.

Designed to simplify the process of calculating Bitcoin mining profitability, a BTC mining calculator predicts the approximate mining income based on inputs like BTC price, hash rate, electricity price and others.

Let’s take an example of calculating Bitcoin mining profitability with a brand new Bitmain ASIC Antminer S19 Pro using the BTC mining calculator by crypto market data provider CryptoCompare.

Antminer S19 Pro has a maximum hashrate of 110TH/s and power consumption of 3250W. Let’s assume that a miner’s pool fee is 2% and the miner is based in North Dakota, where the average residential electricity rate in 2022 amounts to roughly $0.11, versus the United States national average price of roughly $0.14.

Related: BTC mining costs reach 10-month lows as miners use more efficient rigs

Given these variables, the daily profit ratio accounts for 27%, with possible BTC mining profits amounting to $70 per month, or $840 per year, according to CryptoCompare. In contrast, given the U.S. national average electricity price of $0.14, the daily profit ratio amounts to 0% or even generates a loss with the current BTC price and other network indicators.

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Global GPU price drops to compensate for falling Bitcoin mining revenue

The meteoric drop in GPU prices opened up a small window of opportunity for small-time miners to procure a piece of more powerful and efficient mining equipment.

As a direct result of falling Bitcoin (BTC) prices, total revenue earned by miners in transaction fees and mining rewards dropped to its one-year lows at nearly $15 million on July 4. However, a concurrent fall in graphic cards or GPU prices is set to help miners offset their operational costs amid an ongoing bear market.

Bitcoin mining revenue fell 79.6% over a period of 9 months, ever since reaching an all-time high of $74.4 million on Oct. 25, 2021. In addition, a global chip shortage and the coronavirus pandemic shot up prices of the most important part of a mining rig — the graphics processing unit (GPU) — further impacting the miners’ bottom line.

Bitcoin mining revenue over the past year. Source: Blockchain.com

With card manufacturers resuming operations across the world, GPU prices have seen a massive decline with some cards selling for below MSRPs. In May alone, GPU prices dropped over 15% on average as supply exceeded the market demand. Moreover, the recent influx in GPUs has forced sellers on the secondary markets to bring down their exorbitant prices on used mining rigs.

GPU price trend over the past one year. Source: TechSpot

Cointelegraph previously reported that several public Bitcoin miners are well-positioned to survive the prolonged bear market as the low revenue continues to sustain the operational costs of the mining facilities. As shown below, Argo, CleanSpark, Stronghold, Marathon and Roit are some of the miners with a stable mining revenue to operational cost ratio — a fair indication of good health.

Monthly operating cash flow vs. mining revenue. Source: Arcane Crypto

Moreover, the meteoric drop in GPU prices opened up a small window of opportunity for small-time miners to procure a piece of more powerful and efficient mining equipment. Coupled with lower hash rate requirements of 203.6 exa hashes per second, miners now require lower computing power to successfully mine a block on the Bitcoin blockchain.

Related: Marathon Digital keeps on mining despite BTC price slump

Despite the evident drop in mining revenue, Marathon Digital Holdings revealed to continue stacking BTC via mining while being “fairly well insulated and well-positioned.”

Speaking to Cointelegraph, Charlie Schumacher, VP of corporate communications at Marathon Digital, shared insights on their overall operations:

“For reference, in Q1 2022, our cost to produce a Bitcoin was approximately $6,200. We also have fixed pricing for power, so we are not subject to changes in the energy markets.”

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The race for semiconductors: Are crypto miners taking the lion’s share?

Semiconductors are making headlines again this year but to what extent can the shortage be attributed to crypto miners?

Over the last couple of years, the world has been grappling with the lack of semiconductors, which are the substances that conduct electricity between metals and isolates. The most famous semiconductor is silicon. 

If correlating this concept to electronic devices, then the key semiconductors are processors and other microcircuits that are present in almost all devices that people use every day, from smartphones to cars. 

In 2021, semiconductors hit a world record in terms of sales. Electronics production also boomed, with hundreds of millions of complex semiconductors being devoured by gaming consoles. The number of GPUs produced grew to unseen levels, with major manufacturers like Nvidia seeing all-time highs in terms of production.

Despite all this, electronics prices skyrocketed and manufacturers of related goods were struggling to find semiconductors. 

Crypto miners: Guilty or innocent? 

It has become customary to not only mention but to blame cryptocurrency miners for the global shortage of GPU cards and semiconductors. To their credit, miners would buy up huge swaths of graphics processing units, sometimes emptying whole stores at once.

Some countries that are feeling the shortage of cards acutely are already fighting against cryptocurrency mining.

At the same time, the manufacturers, themselves, do not take such a definite position. AMD CEO Lisa Su said in June 2021 that miners are far from guilty for the lack and even complete absence of certain GPU cards. She said that their influence on the market is generally minimal and does not exceed 5%–10% of the total demand. 

Andy Long, CEO of White Rock Management, a digital asset technology company situated in Switzerland, agreed with Su that mining isn't entirely to blame:

“GPUs are still in high demand to power Ethereum and other altcoin mining. Nvidia's published estimate for the percentage of traditional GPUs going to miners is in the single digits, but the true figure is likely higher than that — somewhere around 20%.”

Another important factor behind the shortage of GPU cards is the COVID-19 pandemic. The supply chain showed that due to the many employees who began to work at home, the number of buyers increased so much that graphics processors — a crucial component in home computers — simply disappeared from sale.

However, the situation with miners’ appetite for GPU cards began to change noticeably at the beginning of this year. 

Firstly, the change is due to Ethereum (ETHswitching to the proof-of-stake (PoS) protocol, which is slated to take place in the summer of 2022. 

Currently, the Ethereum blockchain is maintained by miners solving cryptographic puzzles and subsequently receiving a reward, the value of which is calculated according to the hash rate of each individual GPU.

This is called proof-of-work (PoW). As soon as Ethereum switches to the new protocol, miners will no longer be needed as crypto holders will validate block transactions based on the number of tokens they stake.

Since GPU cards will no longer be needed for Ether mining, once Ethereum 2.0 goes into effect, the demand for them will reduce drastically. 

This shift in demand is already very noticeable. In the first two months of 2022, Nvidia’s GPU card sales are down by 75% compared to 2021 as large mining companies that used to purchase such cards have stopped buying. This also means that Nvidia will be forced to redirect GPU cards to the gaming sector and cut prices. 

There are other reasons for the price decrease. Since April of this year, the United States has reduced import tariffs on the supply of goods from China by 25%. America is one of the main players in the GPU market, where companies such as Nvidia, AMD and Intel operate, so the tariff cuts have led to lower prices for GPU cards.

Clean room at NASA's Glenn Research Center. Such clean rooms are essential for semiconductor wafer fabrication.

Buyers’ interest in the cards is also declining against the backdrop of a gradual return of people to offices after two years of remote work and the need to have a modern computer at home to comfortably perform work duties.

“Dedicated mining cards are also a larger part of the picture now,” said Long, “These are cards without video output that are solely for data processing. We first saw these in 2017 with the launch of dedicated Pascal architecture cards such as the P106 and P104. Now the Nvidia CMP range explicitly targets the miners — with some dedicated high-end SKUs only available to those willing to place orders in the tens of millions of dollars. The shortage in dedicated gaming cards is as much to do with simple supply and demand for the core purpose of gaming — and also “HPC” type applications where people use gaming cards for rendering and AI tasks.”

The deficit is not over

The solution to the problem of the shortage of GPU cards sounds simple: Producers need to make more cards to meet the demand. However, in practice, this is not the case. One of the problems is the supply of silicon wafers, which are used to produce the chips. In 2019, the demand for wafers was rather low, but in 2020, after the whole world went into quarantine, the demand for computers, tablets, TVs and other equipment that requires chips rose sharply. The demand for wafers has increased so much that Sumco Corp, the second-largest manufacturer of wafers, said that its production is booked until 2026.

Samsung's Xian, China 300mm wafer facility, May 2014. Source: iTers News 

However, the production of processors, GPU cards and memory cards requires more than just silicon wafers. After the start of war actions in Ukraine, world manufacturers of semiconductors faced a shortage of neon, which is necessary for the operation of the laser systems used to create the chips. The problem is that the two Russian companies, Ingas and Krion, produce 45%–54% of the world’s supply of neon-containing gas mixtures. How global manufacturers will look for a way out of this situation is not yet clear.

In March 2022, some experts believed that the semiconductor shortage could end in 2023. In particular, the head of Micron Technology, one of the biggest producers of computer memory and computer data storage, believes that starting this year, manufacturers will be able to build up a significant stock of chips as well as arrange supplies. In 2023, there will be no such problems and global companies will largely be able to reach the level of production that they had before the pandemic. 

But the situation in Ukraine can stop this recovery and redouble the deficit of chips, forcing the price to rise with renewed vigor. Recently, Intel has claimed that it has stockpiled and continues to monitor supply disruptions while trying to find alternative sources of neon. Samsung stated that some factories may face shortages, the Dutch ASML, which produces scanners for printing chips that are used by TSMC and Samsung, didn’t hide their concerns and said that over the next two years, producers could face a shortage of major machinery equipment. 

So what will happen to semiconductors in the nearest future, and therefore to equipment? The GPU market could likely recover from the COVID-19 pandemic and the declining demand from miners, but global events are once again putting manufacturers to the test with the lack of components for the production of equipment. Of course, it is worth believing that the business will find the raw materials and build new supply chains, but no one can predict how soon this can happen. In any case, the shortage of semiconductors seems to continue, and GPU card prices will go up again, but in this case, the miners will have had nothing to do with it.

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Nvidia hackers selling software unlock for graphics card crypto mining limiters

The hacking group is holding Nvidia to ransom demanding that it unlocks hash rate limiters on its high-end graphics cards.

A hacking group that infiltrated Nvidia servers last month is attempting to sell software that could unlock crypto mining hash rate limiters on the firm’s flagship graphics cards.

A South American hacking group going by the name LAPSUS$ claims to have stolen a terabyte of data from Nvidia servers in late February. The group is now offering software in the form of a customized driver to unlock limiters the company has put on its high-end graphics cards.

Nvidia stated that it became aware of the incident on Feb. 23, and stated, according to reports on Mar. 2:

“We are aware that the threat actor took employee credentials and some Nvidia proprietary information from our systems and has begun leaking it online.”

The cybercriminal group has been trying to extort the California-based company through a Telegram channel. In addition to leaking sensitive personal data that it pilfered, the group is offering to bypass limits on Nvidia’s RTX 3000 series graphics cards to enable higher hash rates for Ethereum mining.

On March 1, PCMag revealed screenshots from the group’s channel which stated “this leak contains source code and highly confidential/secret data from various parts of Nvidia GPU driver, Falcon, LHR, and such.”

LHR refers to “Lite Hash Rate” which is a limiter the company introduced to de-tune its GPUs in 2021 to deter crypto miners from snapping them all up, leaving some for its core market of PC gamers.

The hacking group is also attempting to hold Nvidia to ransom with demands that it remove the limiter from all RTX 3000 series cards and make drivers open-source. It has given the company until March 4 to make a decision.

Related: Nvidia again limiting crypto mining on its RTX-3060 gaming graphics card

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High-end GPUs can cost upwards of $1,800 if in stock, and lower-spec models are very hard to come by leading to the emergence of a used-card market where prices for older graphics cards often exceed what they cost originally in certain regions.

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