Thursday, 09 December 2021

The factors that prevent the price drop of graphics cards

There is a repeated belief that is the following: after the mining bubble is over, the price of gaming GPUs will plummet to the usual levels. However, this might not be the case and the price of graphics cards remain high even after the end of the fad. What are the factors and reasons for this?

There is no doubt that the mining boom brings with it two truths that are undeniable, the first of which is that it has raised the prices of graphics cards and the second is that it is a bubble. The problem is that we do not know when the phenomenon will occur in which the bubble will burst and prices will begin to fall.

Despite this universal idea that many have in the hope that it will be cheaper to update graphics hardware, the analysis of the situation does not take into account other factors that could lead to graphics cards not having their price reduced to the extent that many are are waiting. Why won't the price of Gaming GPUs go down after the end of mining?

Gaming GPUs are not going to drop in price after mining



Calculating the price of a consumer good is not easy, as it depends on a number of complex factors. While it is true that a person may be willing to pay a certain amount for a product, it is also the case that by eager to have the product ends up paying much more or simply because there is no equivalent to performance levels or value.

Currently, graphics cards have risen in price due to the fact that thanks to cryptocurrency mining they have become a means of production and not a consumer product. That is, they serve to make money and that has triggered their price by increasing their value in that regard. This effect has caused mining farms to keep the majority of desktop GPU stock. And this is where we enter a phenomenon that can lead to a price drop once the bubble has burst.

When mining the farms, they increase the clock speed of the VRAM to obtain more bandwidth, basically what they do is make them work at speeds in which they can be operational for as long as possible and without many of their graphics cards leaving to be fully functional. What's more, one of the reasons why mining farms value those that are designed for gaming more is due to the fact that they have HDMI and DisplayPort video outputs, which allows them to sell these as second-hand graphics cards hand.

Demand will prevent the price of graphics cards from falling



The other element that we have to take into account is the number of potential users who need to replace their graphics card and who, due to their scarcity/price, have been halfway to being able to do so. Many of them have money saved that they have accumulated and will be able to pay higher prices to have their AMD RX 6000 or their NVIDIA RTX 30 in their computers, even above the recommended retail price.

When the mining bubble explodes, a secondary market of miners with no interest in gaming will be created selling their graphics cards to recoup their investment and PC users buying these at a high price. The result will be that the average cost will not go down and assemblers and manufacturers will not be left behind when it comes to taking advantage of the situation and capitalizing on it.

Let's not forget that when it comes to mining, graphics cards have a recovery rate in which the hardware is mining for a while in order to pay for itself. So a good part of the hardware will not have recovered its costs when the mining bubble explodes and this will be the one that floods a market full of people who hope to renew the GPU in their PC and not at balance cost precisely.



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