Crypto traders and investors are taking heavy losses as cryptocurrency prices continue a weeks-long collapse. But at least one group seems excited by the downturn in the market—gamers.
For years, crypto miners have snapped up graphics processing units, or GPUs, to provide the computing power necessary to run their mining rigs. The boom in crypto mining drove up prices for GPUs, which are also used in gaming computers to render gameplay, and led to shortages.
But with the crypto crash, miners are off-loading their now unprofitable chips on the secondary market.
The price of graphics processors, like those made by Nvidia and Advanced Micro Devices (AMD), fell by an average of 15% in May, reports computing magazine Tom’s Hardware. May’s decline extends a downward trend in GPU prices over the past several months. An index tracking GPU prices fell by 40% between December and April, notes crypto news site The Block.
Those who’ve been waiting for a a high-end graphics card—a group that includes not just people looking for a souped-up gaming PC, but also digital illustrators and artists—are now expressing glee as the collapse in crypto prices finally lets them upgrade.
Graphics processors help computers create images and manipulate computer graphics. That makes them a key part of any gaming platform, whether a personal computer or a video game console. (Sony’s PlayStation 5 and Microsoft’s Xbox series use custom AMD chips, while Nintendo uses an Nvidia Tegra for its Switch console.)
But GPUs are also better than other computer chips at processing the protocols crypto miners use to validate blockchain transactions and unlock crypto rewards. As miners tried to build more and more powerful rigs to outcompete their competition, demand for GPUs skyrocketed, stripping supply from gaming companies.
But collapsing crypto values mean that mining is now less profitable, and so miners may be dumping their extra GPUs on the secondary market. That’s good news for gamers who finally get a chance to upgrade their custom-made consoles.
Andy Paul, CEO of computer peripheral manufacturer Corsair Gaming, predicted “big growth” in demand for personal computers in an earnings call in May. “We’re pretty convinced [GPU prices are] going to go below MSRP in the next month, certainly by the end of Q2,” Paul said.
But it might not be such good news for chip manufacturers as shipments of GPUs have fallen 19% year on year, reports consulting firm Jon Peddie Research.
“Because the demand for cryptocurrency mining on GPU shipments has been slowly coming down, the demand for graphics cards across the market is normalizing,” said ASUSTek Computer co-CEO S.Y. Hsu on the computer manufacturer’s Q1 2022 earnings call.
GPU manufacturers may have been relying on the crypto market to bolster their revenues, too. Both Nvidia and AMD shares are down over 45% for the year, amid a broader reset for the chip sector. In May, Nvidia paid a $5.5 million fine to the U.S. Securities and Exchange Commission for obscuring how much of their revenue came from crypto miners.
The gaming industry has also been hit by the broader chip shortage, with Sony and Nintendo both reporting constrained production owing to a lack of supplies.
Gamers vs. Web3
Gaming and the world of Web3 have a fraught relationship.
Web3 advocates see gaming as a vehicle to bring concepts like the blockchain or NFTs to those who’ve never used cryptocurrency before. Blockchain games like so-called play-to-earn game Axie Infinity attracted hundreds of thousands of players in markets like the Philippines by offering a chance to make money from selling in-game assets. (Axie Infinity has had a rough 2022, suffering an economic crash and a multimillion-dollar hack. The developers now claim making money was never a core part of their game’s appeal.)
Established gaming companies are also starting to invest in blockchains. Japanese publisher Square Enix Holdings recently off-loaded some of their most famous gaming brands, like Tomb Raider, to raise cash for investments in blockchains.
Gamers and studios have called these initiatives a cash-grab that exploits players. Backlash has forced some large publishers, like Electronic Arts and Sega Sammy Holdings, to quietly pause their NFT plans.
Cryptocurrency prices have taken a pummeling in the past few months after the collapse of high-profile projects like Terraform Labs’ TerraUSD stablecoin, and crypto lender Celsius Network. On Thursday, rumors about the solvency of hedge fund Three Arrows Capital dragged crypto values down even further.
Bitcoin is down 57% for the year, as of noon Hong Kong time, to reach $20,346.20. Ether is down 72%, to reach $1,067.92.
