Cryptocurrency affects the price of hardware IRL now. There’s an entire legion of computers that spend their whole lives solving hashes and producing rewards for their owners. So when the reward crashes a little, the market reacts strangely. Some people buy, because BitCoins always bounce back, and some people sell, because BitCoins might not this time. On top of that, China has re-banned parts of trading!
BitCoin Crash
BitCoin has nearly halved in value over the past few months. The ‘why’ is everything from a general decline in the stock market to celebrities tweeting about BitCoin’s fall, to other cryptocurrencies establishing themselves on the market. It’s truly wild how many different things come into play for an untethered resource’s price, but Bitcoin enthusiasts remain as optimistic as ever that BitCoin will return, and better than ever. It did in the 2010s. It did after the first crash. Surely it will this time, too!
Like I said, many things, some material, some not, affect Bitcoin’s price. As such, many businesses and countries are becoming increasingly skeptical of it. Receiving a few % of a Bitcoin for 700$ of repairs, only to have it drop to 300$? Too bad! The business is forced to ride waves of inflation and deflation until they can use those coins at their desired value or trade them for real money. This will eventually stabilize the price, but until then, the leaps and drops are bad for businesses. Imagine getting a cash payment, only to have to hold onto it until it’s worth recovers enough for you to deposit it in savings, or use it elsewhere – your business operations could come to a halt while you wait for your liquid cash to replenish itself. Bartering would be safer at that point.
The government sees many issues with this system, and understandably a country like China can’t afford to have business owners upset in a time of serious unrest. Plus, taxes! Bitcoin was created primarily to avoid third parties, and no third parties = difficult-to-collect taxes.
Confounding Factors
The epicenter of the cheapening GPUs is China, although Europe is also seeing some major dips in the reseller’s market. But why? China’s partial ban on trading or accepting BitCoin has put a serious damper on consumers’ desire to mine for it. It’s not illegal to own Bitcoin, but when transactions to convert that Bitcoin to ‘real money’ are stifled, what’s the point? They have no promise of when or if the Chinese government will lift their restrictions.
Aside from what officials call ‘speculation risk’, which is what I’ve described in the section above this one, certain regions of China are trying to limit energy consumption, and BitCoin’s heavy consumption makes it an easy target. Mining BitCoins has a lot of complicated math involved, and it’s math that has to be done fast. Only the first person to solve the transaction gets any reward, so it’s a constant race to make the computer better and faster. Better computers eat more energy. GPUs, the common bottleneck part, got siphoned up by BitCoin miners everywhere.
Now, China has fewer BitCoin miners looking to upgrade immediately, but BitCoin’s low price is also convincing some of the folks in other countries that upgrades can wait a bit. Europe’s slowly improving prices are a good sign – maybe the US will finally get some GPUs in! Right?
The Market
Turns out, demand doesn’t always behave as expected! Official reports say that the prices of Graphics Cards are falling, when many people have also noticed the prices going up even on ‘ancient’ and less powerful cards on eBay. Is it just a failure of the buyer/seller market to catch on to the news? Is it a sign of an incoming rebound? Or could it be because the shortage in the US hasn’t actually been resolved in spite of less demand from overseas? With international shipping in such disarray, a dip in China and Europe doesn’t have to mean a dip in the US!
As for the future, who knows? Cards might go down. They might also go up. GPUs are expensive to make and buy ordinarily, and given perfect conditions, a new one could still be worth a thousand-plus dollars. It’s difficult to say what exactly waits for the gamers and workers waiting for the GPUs to come down in price, although market watchers like Tom’s Guide can establish patterns based on the past.
Will BitCoin go back up? It’s very hard to tell given the nature of a cryptocurrency and what we’ve seen from it so far. Sometimes a coin drops and crashes so hard it may as well have died – BitCoin once had a dip so severe people doubted it would ever come back up, down to the high four digits. Is this downwards trend permanent? Will China’s ban influence the end results? I have no idea! Experts in similar fields can’t tell either, crypto is a wild, wild West compared to stocks. What they do say is generally along the lines of ‘we can’t tell, but it could dip very badly’. It’s akin to gambling.
If it does recover, European cards will almost certainly follow, although the depressed prices in China likely won’t until restrictions are lifted. American cards, having shown no sign of going down in price despite a clear dip in Bitcoin values, may not be as tied to crypto-mining as they formerly were, so BitCoin’s movement may have no impact. America is a big country with a lot of people in it, so ordinary demand for the currently out-of-stock GPUs may be holding prices high all by itself.
Sources:
https://www.tomshardware.com/news/gpu-pricing-index
https://www.tomshardware.com/reviews/best-gpus,4380.html