GRAPHICS CARD OUTAGE AND CRYPTOCURRENCY MADNESS

INTRODUCTION

We have been following this story since the last newsletter, and it's still a huge issue, with many retailers unable to even keep graphics cards in stock, and prices on sites like eBay up to $1000 for one Nvidia Geforce GTX 1080 TI.

Many people like Mitchcangelosi, a PC builder on Reddit are merely fed up with the prices of the GPUs and frustrated in companies that develop the processors used in graphics cards.

"With the insane prices of GPUs and company’s wanting their cards to be used for gamers why haven’t they updated their software and driver support so, they can’t be used for mining? Why can’t a company like NVIDIA force their customers to install their software or else, drivers aren’t supported on their system and within the software have something running so mining programs don’t detect or can’t use their GPUs?"

His frustration is all too known, and we've had customers asking us the same questions. So we decided to take another look at this nation-wide shortage, and better decipher what exactly is going on here!

CRYPTOCURRENCY AND THE GRAPHICS CARD ISSUE:

It's complicated

Many gamers are convinced that the chipset manufacturer can merely utilize software that incapacitates cryptocurrency mining, but gamers frequently hardly understand why a graphics card is being used for mining cryptocurrency. Consequently, before we answer the issue, we must first understand what a graphics card does while mining cryptocurrency. A graphics card contributes to a system called "proof-of-work", it is a portion of data which is difficult, costly, and time-consuming to produce; but easily verifiable for other nodes in a network of miners; satisfying specific requirements. Building proof-of-work data can be a stochastic process with a low probability that any work will be correct, so a lot of trial and error is required on average before a valid proof-of-work is generated. Bitcoin uses the Hashcash proof-of-work system to verify data. For example, for Bitcoin, the message "Hello, world!0" could be translated into "1312af178c253f84028d480a6adc1e25e81caa44c749ec81976192e2ec934c64" and thus, the computer would solve intricate math equations to figure out that the translated message reads "Hello, world!0" through instructions that are built into the Hashcash software. This is how miners in the cryptocurrency world mine their cryptocoins and generate pure profit. Additionally, this offers a simple way to verify transactions and then post them on something called a ledger where other nodes on the Bitcoin network verify the transaction and (by doing complex math equations) prove that it is indeed an authentic transaction.

So, if the cryptocurrency miners need to solve complex math equations, doesn't that mean that they should just need a calculator that does math automatically? Shouldn't the computers they use be utterly different from the one I use to play video games? Unfortunately, no. Surprisingly graphics cards when boiled down to their purest forms, are just calculators with a circuit that efficiently delivers instructions on how to do complex math equations, the same thing as a computer processor. However, the difference is that the processor you use on your computer when compared to a graphics card is less appealing to the miners because the processor is built to handle tasks in general computing accurately. The most notable difference is that the processor is incapable of doing many simple math equations at once, but it can do one math equation faster than the graphics card. Hence, the reason why a graphics card is the choice of miners; as it can do many simple math equations thousands of times more quickly, making it a fantastic contender as it can solve a complex math equation by addressing the complex equation in manageable chunks.

Backtracking to the original question asked by the Reddit user Mitchcangelosi, "why haven’t they updated their software and driver support so they can’t be used for mining?". Knowing what we know after figuring out how Bitcoin mining works. A graphics card company could not release software that merely undermines the GPU for cryptocurrency mining. Because in doing so; they shut down the graphics card's instruction chipset, thus, the graphics card with either be incapable of operating or so crippled that it would be unable to run any games. Concerning specific mining programs, it is imperative to think from an analytical business perspective; Nvidia has produced sales so high that the company made $2.91 billion in revenue during Q4, an increase of more than 34% compared to the same time a year prior. Even if the company says they want to stick with gamers during this challenging time, the company is making significant numbers, and shareholders openly endorse this. (https://www.fool.com/investing/2017/12/12/why-2017-was-a-year-to-remember-for-nvidia-corp.aspx) There is zero incentive to stop this cryptocurrency mining fad, and because there are only two graphics card companies that engineer chipsets, ultimately there is nowhere for gamers to turn, and there is no amount of protesting that can make graphics card companies discontinue selling cards to miners.

At the same time, criticism comes when the chipset company releases a new graphics card, and they are unable to sell because gamers turn to the used cards (due their price to performance ratio when at used prices) that the miners sell because either a new graphics cards is released that is better at cryptocurrency mining or when the cryptocurrency market falls significantly. This happened to AMD in 2010 through 2013, in which AMD was unable to sell graphics cards until it's RX series graphics cards began to manifest performance that was significantly better at gaming than that of the cards the miners drop. Thus graphics card companies growing concerns about the long-term effects this will have on their graphics cards future sales, began playing a role in attempting to slow the sales of their cards, and direct their product flow towards gamers. However, the way this is being carried out is going to end up hurting gamers even more, as chipset manufacturers told retailers to limit sales of graphics cards per household, and ultimately resulted in miners going directly to the graphics card vendor, and buying them straight off the vendor. This meant that the retailers have no way of finding consistent stock of graphics cards to supplement their capital of graphics cards. Leading many individuals to buy graphics cards when they are in stock, and resell them at inflated prices - In all it comes down to one thing; supply and demand.