Cryptocurrencies are flush with idiosyncrasies, and although they were intended to function as a digital expression of money, they have a fandom that is more akin to celebrities than currencies. After all, there aren’t many chat rooms buzzing about the potential of the dollar bill.
In fact, even the way cryptocurrencies are produced is strange. Unlike fiat currencies–which can be, and too often are, printed on a whim–digital currencies have to be “mined” into existence.
Once cryptocurrencies began rising in value, people eagerly started working to earn Bitcoin and other tokens–or more specifically, they put their computers to work–leading to a bizarre scarcity of graphics processing units (GPUs) around the world.
Loading Up On GPU
Creating digital currencies is more akin to a race than a manufacturing process. Independent users lend their computing power to maintain the decentralized ledger and the first user to complete a complex cryptographic puzzle receives the currency reward.
Consequently, computing power is at a premium and since graphics cards like the ones used in powerful gaming PCs are the best available option for most people, they began selling at an astounding rate.
The swarm happened both steadily and all at once. Independent users began purchasing GPUs to enhance their mining capabilities and card producers like Nvidia, Advanced Micro Devices, Micron and Intel experienced surging sales. As part of the crypto craze, Nvidia and Micron stocks rose by 45 and 50 percent, respectively, in 2017.
As crypto markets soared, so did the amount of GPU power being added to networks. As Mitch Steves of RBC Capital told The Wall Street Journal last summer, “about $100 million worth of GPU processors were added to the networks that mine Ethereum in just 11 days in early June.”
Eventually, store shelves were bare, gamers were angry and crypto miners were stocked up and ready to profit from their newfound ability to mine digital currency. Unfortunately, those opportunities quickly deteriorated and crypto miners started seeing diminishing returns, a trend that is nuanced and complicated.
In short, a combination of factors including increased competition from the glut of new miners, the emergence of corporate mining farms and the implementation of ASICs mining have significantly curtailed users’ profits.
This might be good news for cryptocurrency networks and token holders. Crypto mining was never the most efficient or effective option and new methodologies are sure to improve the user experience.
However, numerous miners are left with an abundance of GPU capability that is unused or underutilized and many are scrambling to find a use case for the technology.
For many people, purchasing more GPU capacity wasn’t cheap. As demand rose, so did prices, some by as much as 80 percent.
To recoup their losses, some people began selling GPUs, recovering a fraction of the original purchase price. This attempt is exacerbated by the fact that the cost of new GPUs is trending downward, which makes it even more difficult for users to recoup their losses.
Marco Iodice, co-founder and CEO of Leonardo Render, a company striving to provide consumers with alternative use cases for their excess GPU, sees this anxiety in crypto enthusiasts. He explained:
“Now they have a piece of hardware that is worth half of the purchase value, so selling is a desperate but at least is an option to recover part of the initial investment.”
As a result, alternative use cases are beginning to emerge. Iodice’s company employs the blockchain to create an ecosystem where GPU holders can sell their excess computing power to creatives looking for graphics and video rendering capabilities, which also rely on GPU power.
Other initiatives are focused on emerging technologies like artificial intelligence research.VectorDash, for example, is using a decentralized network to provide AI researchers with affordable GPU by harnessing the capabilities of former crypto miners.
Ultimately, according to Iodice, “GPU is an extremely flexible hardware,” and the alternative use cases are likely just beginning to materialize. For creative entrepreneurs, there is a plethora of available GPU that can create new projects and platforms that rely on the decentralized economy and blockchain to facilitate this unique arrangement.
Although it’s clear that the era of crypto mining is quickly ending, the last word on this technology has not been uttered and opportunities to turn a profit might still exist if GPU users are willing to try a different approach.
Cover Photo by Matteo Paganelli on Unsplash
Disclaimer: Our writers’ opinions are solely their own and do not reflect the opinion of CryptoSlate. None of the information you read on CryptoSlate should be taken as investment advice, nor does CryptoSlate endorse any project that may be mentioned or linked to in this article. Buying and trading cryptocurrencies should be considered a high-risk activity. Please do your own due diligence before taking any action related to content within this article. Finally, CryptoSlate takes no responsibility should you lose money trading cryptocurrencies.
Did you like this article? Join us.
Get blockchain news and crypto insights.