Ethereum Miners Are Selling Their Graphics Cards

Miners lose, gamers win.

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Jul 21 2017, 2:27pm

Image: Daniel Oberhaus/Motherboard

The digital gold rush for cryptocurrencies like ethereum has caused a scarcity of graphics cards, and PC gamers are mad. Products made primarily for gaming happen to be really good at crunching the numbers required to mine digital currency, and miners have been buying up all the graphics cards.

Can you blame them? From April of this year through the middle of June, this is what happened to the price of ethereum:

Image: Screenshot of Coindesk.com

So miners bought up every modern graphics card they could find, especially popular mid-range cards like the Radeon RX 480 and 580, and GeForce GTX 1060, which are on the affordable end of graphics cards that can handle the latest video games. These cards hit the sweet spot for price and performance, both for miners and for gamers. Suddenly, there was a scarcity of cards and prices skyrocketed.

But over the last month, etherium has lost half its value.

Image: Screenshot of Coindesk.com

At current ether prices, those multi-GPU mining rigs just won't pay themselves off as quickly. And so, as they have done in the past when mining with certain GPUs became far less profitable, the miners have started to sell off their equipment.

Ebay listings for "ethereum mining rig" number 288 at the time of this writing. Some are just frames and others are new. A quick search on eBay also shows that there were 57 completed sales for "ethereum mining rigs" in May, 120 completed sales in June, and 277 in July so far. One explanation is that interest in ethereum is so high eBay sellers are simply moving more mining rigs to meet demand, but item descriptions and the sellers I contacted tell a different story.

Consider this listing for a rig containing six RX480 GPUs. The seller says, "Selling my mining rig (currently mining ethereum) which I built a little over 3 months ago." Three months ago, it probably seemed like a stellar investment. And for a time, it was—between May and July ethereum's price skyrocketed 200 percent before going into a sharp decline.

It's not just entire mining rigs that are for sale online, either. There are more used graphics cards for sale—particularly the popular RX 480, RX 580, and GeForce GTX 1060 cards—than we would normally see.

This user has a whole stack of identical RX 580 cards, "used for one month."

I asked one eBay user, gregfunsmile, why he's selling his RX 480. "I've used it for ethereum mining for 1 month," he told me in an eBay private message. "Been good for it. Selling because I am no longer interested in mining and getting out of the market."

Another user selling his RX 580 told me in an ebay message, "I was going to build a mining rig but realized it was not going to be profitable."

Because of how the blockchain works, ethereum mining gets more difficult over time, causing any particular hardware setup to gradually earn less money every day. Based on the RX580's processing ability, power consumption, the drop in trading price, and the increase in mining difficulty, I did some back-of-the-envelope calculations.* According to my math, the same graphics card that used to earn about $5 a day now earns less than roughly $2 a day.

A $300 graphics card that might have paid for itself in 2-3 months (after electricity costs) will now take over 6 months, at best. A sizable mining operation can stomach that sort of long-term investment, but there aren't a lot of hobbyists who are willing to stick it out.

You can never tell what is going to happen to the trade price of cryptocurrencies, but most people probably don't expect the situation to suddenly and quickly reverse itself. What's more, many ethereum mining enthusiasts expect AMD's current cards to stop performing as well as they do now within a few months—tests have shown a severe reduction in performance as the complexity of ethereum calculations increase. Nobody knows what the problem is for sure, or if a driver update might fix it, but an RX 480 or 580 bought in the last month might never pay for itself once you factor in electricity costs.

This is bad news for those who have invested in cryptocurrency mining, but good news for gamers. The sudden influx of used hardware up for sale makes me cautiously optimistic that the mad scramble for new cards will soon ease up. In a matter of weeks, gamers might even be able to buy brand-new GPUs that are supposed to cost $200-300 without paying exorbitant markups.

Just in time for the rush of new games in the fall.

*For the blockchain inclined, here's my math, with a little help from Etherscan's ether mining calculator : Typical RX580 hash rate is about 25 MH/sec and uses about 185 watts of energy. Mid-June the ethereum network hash rate was about 44,000 and the average block time was around 16 seconds. That means your card would generate an average of 0.0153 ether per day.
At the mid-June price of ~$360, that's $5.50 per day. (minus about 40 cents for electricity)

Today, with the network hash rate at 63,000 and the block time at 18s, that same card would produce 0.0090 ether per day. With today's price of about $210, that's $1.89 per day...again take off 40 cents or so for electricity from that.

I figured round estimates was safest, as the exact network hash rate/block time and daily price fluctuates from one moment to the next.