Mining cryptocurrencies like ethereum using graphics cards was once also practical with Bitcoin; however, these days are long gone with the introduction of ASIC miners specialized in dealing with the hashing algorithm used by Bitcoin. With NVIDIA ramping up its efforts to limit their GPUs’ hash rate potential, is this trend finally on its last legs, or still going strong?
With some algorithms like those used in Bitcoin (SHA-256) and Litecoin (Scrypt) has moved heavily towards being dominated by ASIC miners, the Ethash algorithm used by Ethereum was designed to make it ASIC resistant resulting in it being strongly favored by GPUs miners in recent times. However, Ethereum isn’t the only cryptocurrency attracting hash power from those operating GPU mining rigs, Monero is still a strong contender, as are the many other smaller projects that haven’t attracted the attention of companies that design and produce ASIC miners at least haven’t yet.
What is GPU Mining?
GPU mining is the use of graphics cards to mine cryptocurrency. The process involves using the cards to solve complex math problems with the goal of being rewarded in the cryptocurrency being mined for solving the next block in the chain. Miners are an essential part of cryptocurrency networks that operate using proof-of-work, examples of these include Bitcoin (BTC), Monero (XMR), Dash (DASH), Litecoin (LTC), Ethereum (ETH), and even the most well known “meme coin” around Dogecoin (DOGE).
Not all cryptocurrencies can be mined; some projects have opted for different approaches to securing their networks, such as proof-of-stake used in Cardano (ADA), Polkadot (DOT), Kusama (KSM), and Avalanche (AVAX). While Ethereum aims to pivot towards proof-of-stake, it is currently is the most popular cryptocurrency for GPU miners in 2021.
The most popular graphics cards used to mine cryptocurrency change with each new major release of cards. As cards become more efficient for other use cases like gaming, rendering, and even machine learning, they also typically increase in their ability to mine crypto. While often support for new cards at launch is less than perfect, the demand for increased hash rates often results in rapid development to improve the different applications used to mine various cryptos.
The Silicon Shortage that Led to a GPU Frenzy
Currently, GPU prices are pushing to the extreme, with many blaming miners. However, it’s far from a simple issue. The Coronavirus pandemic didn’t just cause life-changing shutdowns the world over; it also amplified purchases of many forms of electronic devices. On top of this sudden shake-up, the world over, you have people who were previously happy to use public transport suddenly pushing quickly to purchase vehicles to reduce potential exposure to COVID-19. Even a poorly timed trade war between the United States and China added just more fuel to what has become a struggle of supply and demand at a large scale.
As of writing, it’s extremely difficult to purchase a high-end GPU at the recommended retail price (RRP). With reports that GPU shortages are unlikely to change any time soon, a lot of attention has been focused on the cryptocurrency markets, with some hoping that a drop in prices of Ethereum and other GPU mined cryptos will result in panic selling of cards by miners to help fill some of this excessive demand. However, many GPU miners operate smaller farms from their homes. If there was a significant enough shakeup that some of these cards were to reenter the market, it’s unlikely they would do so at low prices; with the demand so high currently, moving cards is not a difficult feat by any means.
Is Nvidia Fighting Back or Cashing in?
With the launch of 3000 series graphics cards from Nvidia came a flurry of reports from miners that the hash rates of this generation of cards were quite an exception. While the 3080 took the cake for the price to performance for miners on the higher end, everything from the 3060 to the 3090 are suitable targets to be added to mining rigs.
With much frustration from those looking to purchase cards but unable to find and in stock, or not being sold for outrageous prices by scalpers on Facebook and other online marketplaces, Nvidia has taken to trying to reduce the appeal of these cards to miners to reduce some of the extreme pressure on the supply of cards creeping into the market.
Starting earlier in 2021, Nvidia released 3060 model mid-range graphics cards that used a driver that made hashing on the Ethhash algorithm used by Ethereum far less efficient, making them not very appealing to miners. However, not long after, these began to make it into the hands of buyers; a development driver without this restriction leaked and quickly made its way online again, opening up these cards as an option for miners.
After this failed effort, Nvidia is attempting to curb mining on their 3000 series Geforce RTX cards again, with new limiters being rolled out across the lineup this time. Whether or not this lasts or whether highly motivated miners the world over will find a workaround, only time will tell. In any case, this will likely be a challenge that is vigorously pressure tested. While this may seem well-intentioned, it probably has something to do with their launch of the Nvidia CMP HX cards, which are optimized for mining, something they did previously back in 2017 when demand was also high for GPUs to mine. However, the situation was far less pressurized than it is today. These specialty mining GPUs come with some limitations likely due to cost-cutting for these models, most notably a complete lack of display adapters.
With AMD cards also a popular choice for GPU miners, many have looked to team red to start doing the same thing. In response, they have stated they have no plans to limit cryptocurrency mining on their graphics cards. It will be interesting to see how this shift impacts the availability of GPUs from both of these major manufacturers with freshly limited RTX cards starting to reach the market at any moment.
Previously the RX 500 series from AMD, in particular, the RX 580 and RX 570 GPUs were staples for miners as they could be found in abundance for reasonable prices, but as many of these were 4GB models to minimize costs and the demands of the Ethereum network outgrew this with growing ram requirements many of them found their way back into the used market.
Is GPU Mining Dead in 2021?
No, and this is unlikely to change in the near future. Even with Ethereum looking to move to a proof-of-stake algorithm, plenty of projects like Monero (XMR), Ravencoin (RVN), and even Ethereum Classic (ETC) are all ready and willing to accept more hash power from GPU rigs around the world.
With even single GPU owners leveraging programs like Nicehash to help subsidize their purchase of GPUs with sometimes even minimal knowledge of crypto, the interest in mining cryptocurrency using graphics cards isn’t going anywhere soon. Even if cryptocurrency prices dropped significantly and a bear market ensued, many will patiently collect their mined cryptocurrency to cash out on the next move up, amplifying their earnings. Unlike large bitcoin mining farms, a significant amount of GPU mining is performed by hobbyists rather than large businesses; with the lower costs involved, it becomes far easier to speculate on the future absorbing power costs until the market recovers.
If you’re making the most of your graphics card putting it to work, consider increasing your profit margins a little more by trading P2P on LocalCoinSwap. Offering trades for in-demand payment methods can increase your mining margins helping to make the most of your mining efforts while providing better access to cryptocurrency for others.