crypto: Crypto crash leads to firesale of hardware


Mumbai: Worst losing streak in crypto currencies around the world is having a domino effect on the prices of hardware that sustained the complex process of extracting these digital resources.

Gone are the days when cryptocurrency miners and hardware manufacturers hoarded money amid the recent digital asset boom. In the wake of falling cryptocurrency prices, mining such digital assets has become unfeasible, causing miners to dump their high-end equipment on resale. market which has resulted in a drop in prices.

Show this: Until a few months ago, if you needed a high-end graphics card, used to mine new bitcoins, it would have cost you up to ₹2 lakh on the black market. Now users can buy the same cards online at their sticker price of around ₹1.1 lakh per unit. That’s a 45% drop.

The drop in the price of graphics cards has been fueled by the dumping of these high-end pieces of hardware on the resale market by the crypto community.

“Every week the prices are falling,” said Vibhor Agarwal, chief executive of Supertron, one of the largest distributors of computer hardware in India. “The long-awaited price correction has started to happen.”

Cryptocurrency mining requires users to solve a complex set of problems on computers that unlock or mint new cryptocurrencies, such as bitcoins. These complex algorithms require a lot of computing power to solve and miners often use graphics cards designed for intensive gaming for this job. As prices crashed, cryptocurrency mining became unfeasible as the process itself is very expensive.

The sell-off in major cryptocurrencies began in April as global central banks began adjusting their balance sheets and raising interest rates. The ultra-accommodative monetary policies of the central banks of the developed world, which weighed down their currencies, have been one of the drivers of the demand for cryptos, which benefited from the perception of lower supply.

Bitcoin, the most popular cryptocurrency, is down by a third since November 2021, from $61,000 to $20,789 now. Ethereum, another popular cryptocurrency, has dropped nearly 70% since April to $1,203.

Crypto mining is an expensive process. In addition to high-end hardware, it also consumes a lot of electricity. Two years ago, in the midst of the cryptocurrency boom, several miners added newer rigs to maximize their profits. A mining “rig”, which is essentially a bank of graphics cards prepared for mining, can contain anywhere from a few to dozens of cards.

As miners pull out of the market, and even dump the cards they own into the resale market, demand for graphics cards has reached levels seen in 2019 before the latest cryptocurrency boom began, according to Deepak Gupta, director national graphics card manufacturer. Limited Zotac technology.

“Long wait times for these pieces of hardware have become a thing of the past,” Gupta said.

From delivery times of up to 16 weeks in 2020 and 2021, suppliers in India can now ship within a couple of weeks of placing an order. The cards are not made in India and the market is entirely dependent on imports.

Prices have approached the manufacturer’s suggested retail price (MSRP) in the market. For example, a card containing an Nvidia RTX 3080 TI chipset retails for around ₹1.15-1.2 lakh in India, compared to the manufacturer’s MSRP of ₹1.11 lakh, Gupta said.

“The market is getting back to its original shape,” he said.

Until earlier this year, the demand for these graphics cards was such that their shortage caused a war between miners and gamers. Gamers claimed that miners were stockpiling hardware designed specifically for gaming and that mainstream user prices were out of the market. Now, the players are having the last laugh.