Graphics cards: current situation and causes
In our special we look at the graphics card market, namely at the current situation, the factors for the scarcity and cryptomining, but also at the prospects for the future and upcoming graphics cards. Since autumn 2020 there has been a chronic undersupply of graphics cards. This ensures price increases for graphics cards suitable for gaming from the entry-level to the high-end range. Also the Models from AMD and Nvidia, which have only gradually come onto the market since September 2020, are affected and cost significantly more than when they were released. More detailed price analyzes will follow later – first we will describe the situation in general.
Older models are either no longer available anyway, because they are no longer produced, or have also experienced sharp price increases. The reasons for this are diverse. Logically, the main problem is very simple: the demand is significantly higher than the supply.
But why is that so? On the one hand, since autumn 2020 at the latest, there have apparently been more people who either want to play on the PC for the first time or after a break, because they are looking for a new hobby for their free time due to the corona pandemic. Among these players there are certainly many who actually wanted to buy a Playstation 5 or Xbox Series X, but did not get a chance, because there are also problems with the consoles in serving the demand. On the other hand, many who were already gamers have waited for the new graphics cards from AMD and Nvidia, but looked the tubes and no longer have a sufficiently strong graphics card. These gamers are therefore sometimes looking for alternatives to graphics cards that are below new models such as the Nvidia GeForce RTX 3060, but are still stronger than their existing graphics card.
Another demand factor are miners, i.e. people or companies who provide hardware power to help calculate the encryption of crypto currencies such as Bitcoin or Ethereum. For this help there is a reward in the form of the respective currency. There is hardware that is specifically intended for mining. Nevertheless, some miners also use normal graphics cards for mining cryptocurrency. Because the prices are so high that it is worth paying sums of money for some graphics card series that are irrational from a gamer’s point of view compared to other gamer graphics cards.
These graphics cards are apparently more profitable per dollar invested than special mining hardware, which we will explain in more detail on the next page. For example, an Nvidia GeForce RTX 3070 costs 40 percent more than an AMD Radeon RX 6700 XT, although the latter is not 10 percent slower in games. This surcharge can’t just be because the RTX 3070 is better suited for ray tracing.
In addition to the demand side, there are mainly problems with the supply – because AMD and Nvidia could be happy about the demand and produce what they can. But also because of the corona pandemic, the demand for chips of all kinds has increased sharply or, in some cases, has only shifted – but one way or another the following applies: Whoever ordered first from the specialized chip manufacturer will be served first. AMD and Nvidia did not secure more production capacities in time or were outdone by companies from other product areas that may have had more market power or funds.
As a result, they now can’t make nearly as many GPUs as they could sell. There are also speculations that production at Nvidia or AMD is not going without any problems and that it is not just due to the capacities of the factories. Due to corona protection, production is generally a bit slower. Not only AMD and Nvidia suffer from a lack of production capacities and slower production, as well as failure to secure slots for chip production in good time. For example, in the automotive industry, too, some manufacturers have had to pause production for days or weeks because some chips for the electronics in the cars were simply not available quickly enough. The bottleneck also affects many other chips, including those that are intended for mining hardware, so that mining hardware is not necessarily a bargain in terms of price. This is one more point why miners do not (only) resort to mining hardware, but to graphics cards.