As BTC and ETH are rapidly losing value, swaths of miners are forced to sell hoarded GPUs for auction.
Some industry experts say that mining a single BTC now would cost up to $25,000.
Ethereum would switch to a Proof of Stake model, meaning miners would no longer use GPUs.
For many years, bitcoin (BTC) mining has been an astonishingly lucrative activity, with gross margins as high as 90%.
For mining profitability, three key factors are responsible – the price of BTC, high power costs, and computing hardware. Currently, all three factors contribute to major distress among miners.
For instance, BTC and Ethereum (ETH) are rapidly losing value. The largest cryptocurrency by market cap 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 worst-hit crypto, losing its price by 70% in one month and now trading at $1087.
These mining centers, akin to data centers, are power-hungry and consume enormous 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 running blockchain data centers, the energy rates have soared up in some parts of Europe that mining one BTC would cost up to $25,000.
Given these factors, miners have given up on graphics processing unit (GPU) mining. They are forced to auction graphic cards on online marketplaces at less than half the cost of the GPUs.
Mass sale of graphic cards for auction
Crypto miners and internet cafe owners, who were involved in buying mass graphic cards for mining, are left with nothing but to dump their GPUs or sell them for as low as $300-$350.
GPU flood is here.
Chinese miners and South Asian ecafes now dismantling their mining rigs and putting cards up for auction on livestreams.
3060 Ti's going for $300-$350 US … pic.twitter.com/kphmIt7vZw
— Hassan Mujtaba (@hms1193) June 21, 2022
On Tuesday, pictures of mining grids flooded online on various Chinese internet services companies like Baidu that was up for sale.
Graphic cards from AMD and NVIDIA were sold for over half their actual costs. For instance, the popular NVIDIA GeForce RTX 3060 Ti graphic card is now auctioned for $300, when the actual price was over $700-$800 a few months ago.
Users took to Twitter and other forums advising buyers not to buy these GPUs as they were “abusively used for mining.”
One user on the Geeks 3D forum noted,
“With the crash of the crypto market (Bitcoin, Ethereum as well as other cryptocurrencies), a lot of graphics cards are now on sale by some of the most important of crypto miners (Chinese GPU miners, scalpers, and Internet cafes) at low prices, below MSRP! Keep in mind that these graphics cards were abusively used for mining during months, and it’s not recommended to buy one of them.”
However, enthusiastic gamers would still find these overly used graphic cards useful and buy them at a great deal. According to a Bloomberg report, Ethereum miners have spent roughly $15 billion on GPUs during the previous mining craze since 2021.
GPUs are no longer useful for mining
As Ethereum is shifting from its proof-of-work to proof-of-stake mechanism, many miners aren’t happy, forcing them to find an alternative.
As reported by FX Empire, ETH announced that it would shift to POS between the third and fourth quarters of this year. It is a significant step as it reduces energy consumption by more than 99%, good news for environmentalists and crypto critics.
However, ETH has pushed this merge several times, disappointing expectant. Tim Beiko, a computer scientist who coordinates Ethereum developers, noted that the odds of it not happening this year are “very low.” He added,
“The thing I want to avoid is someone buying a mining GPU today, and the Merge happens this summer, making it almost worthless.”
This article was originally posted on FX Empire