Expected GPU price drop in 2018

During its latest financial results, graphics card giant Nvidia announced that it expects GPU sales to crypto-miners to drop by as much as two thirds next quarter, adding further evidence that prices will stabilise soon.

The announcement (first reported by Bloomberg) came alongside the revelation that Nvidia earned a massive $289 million from cryptocurrency-related sales in the first quarter of 2018, surpassing its own lofty expectations of $200 million.

The news comes just one day after it emerged that Nvidia 10-series GPUs are finally back in stock across multiple retailers, including a GTX 1070 Ti’s available for £399.95, and GTX 1060’s available for £189.98.

We’ve also heard reports from sources closed to Taiwainese manufacturers Gigabyte and MSI which claimed that demand for their GPUs has plummeted. It appears we’re now seeing the benefits of this drop. The sources, as reported by Digital Trends, claimed that shipments for the cards dropped by a massive 40% in April, the drop driven mainly by a lack of interest from large cryptocurrency mining operations.

It all adds up to paint an optimistic image that the days of price inflated graphics card prices might finally be coming to an end. This inflation was primarily caused by the explosion in popularity of cryptocurrency mining, which saw people bulk purchase graphics cards and use them to ‘mine’ the valuable virtual coins.

Ordinarily, a rise in demand for a product leads (eventually) to a drop in price. Manufacturers are able to scale up the amount that they’re producing, and they’ll then benefit from economies of scale that bring down prices.

However, in the case of graphics cards this didn’t happen because the massive rise in demand for GPUs coincided with a global VRAM shortage, meaning that manufacturers have been physically unable to scale up supply to match demand.

Where’s the demand gone?

But with the price of Bitcoin and other cryptocurrencies remaining high, what’s to blame for the massive drop in demand for graphics cards?

The answer appears to be the increased use of ASICs (or application specific integrated circuit machines) for mining cryptocurrencies. As the name implies, these are machines that are built specifically for mining cryptocurrencies, and they’re incredibly good at it.

In the same way that GPUs are more efficient than CPUs for mining, ASICs are a lot more efficient than GPUs. When it comes to cryptocurrency mining, if you’re not using the most efficient hardware then you’re going to risk spending more on electricity than you earn in mining fees.

It will likely take a few months for the pricing of GPUs to reach normal levels once more after demand drops, but these first signs have given us hope that the days of sky-high GPU prices might soon be behind us.