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The prices of Graphic Processing Units (GPUs) have fallen to their lowest ebb ever in China over the past few months. The reason for this is not far-fetched, as one of the major industries where they were deployed has embarked on a fundamental change of course that renders them redundant. Hence, the demand for GPUs has dropped significantly, leading to a consequent drop in price.
Ethereum mining was one of the major areas where GPUs were deployed significantly. Originally based on the Proof-of-Work (PoW) algorithm, Ethereum mining was the main process by which the network was sustained and secured. Like other PoW networks, participants in the mining process were rewarded for the resources they contributed in keeping the network secure and running.
On September 15, 2022, a fundamental process was completed on the Ethereum network. Ethereum completed the move from the original Proof-of-Work algorithm to becoming a Proof-of-Stake (PoS) protocol. This process implied that the use of miners to maintain and secure the network was no longer needed, hence it became completely abandoned.
The final event which signified the completion of the process is known as the Ethereum Merge. In plain terms, it involved the joining of the Ethereum mainnet, which has been consistent since the genesis of the network, with the relatively newly created PoS layer, the Beacon chain. The Merge is expected to improve the Ethereum network in its key areas of scalability, security, and scalability.
Since Ethereum mining has become unnecessary, the owners of GPUs that have been deployed in the mining exercise are looking to dispose of their gadgets. This has led to the flooding of GPUs into the market, thereby activating the economic laws of demand and supply. With increased supply, prices have fallen, and this time, the fall in price is significant, especially in China which had been the hub for GPU crypto mining until the clampdown about a year ago.
Graphic cards, otherwise referred to as GPUs, including Nvidia’s GeForce RTX 3080, RTX 3080 Ti, and RTX 3090 were in high demand when Ethereum mining was still a thing. Compared to their current prices, these GPUs used to be sold for a much higher value than what they are sold today. The price drop began a few months ago, as users anticipated the actualization of the Ethereum Merge which has rendered the GPUs thereby deployed redundant. It has also deflected the demand for new GPUs for mining by new users.
According to a seller with the surname Peng in the Shanghai electronic retail market, the RTX 3080 that used to be sold for as much as 8,000 yuan has fallen in price to being sold for around 5,000 yuan. This price drop happened within the space of three months, representing a sharp decline.
Another seller whose surname is Liu in the same market also has a similar narration that corroborates Peng’s opinion that prices have crashed significantly. In the case of Liu, a customer of his who bought an RTX 3080 graphic card late last year for 9,400 yuan is condemned to selling it for about half the original price.
The dwindling demand for GPUs is so significant that the once booming market where sellers struggle to meet the demands of buyers is almost comatose. Retailers often sit idle with packs of unsold graphic cards sitting in their shops with no buyers in sight. This trend has also extended to various online stores where the prices of RTX 3080 graphic cards have been marked down by a few hundred yuan over the last few months.
The Ethereum Merge is an event that has weighed down on the already precarious situation of Chinese crypto miners. The crypto mining clampdown of 2021 and its subsequent enforcement also pushed several miners into disposing of their GPUs by pushing them into the market. The influx caused by the Ethereum Merge adds some extra momentum to the falling market as GPU owners who cannot find any other use for the gadgets are looking for how to sell them off and recoup some part of their investment.
Having served in mining rigs, these GPUs are not expected to be in optimal conditions. Their prices will be conditioned to some significant mark-offs, which introduces competition in price even to brand new GPUs. All these factors put together explain why the prices of GPUs have crashed so much in China, with the Ethereum Merge representing a major catalyst in the process.
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