How Bitcoin Mining is Affecting the Tech Industry
How Bitcoin Mining is Affecting the Tech Industry
I was at a local PC parts shop the other day to find parts for a gaming rig I wanted to build. The cost of the Graphics Processing Unit (GPU) I wanted to buy had risen so much that I decided to buy a lower end GPU. This made me ponder if the price increase was due to the recent surge in the number of people mining Bitcoin and Altcoins. With that, let us begin.
Such backstory, so wow.
How Bitcoin and Most Altcoins are Mined
Before we discuss how it affects the tech industry, let us first discuss how they are related. In simple terms, "mining" is when users called as miners use hardware and specialized software to solve complex math problems that validate a bitcoin transaction. The more powerful the device they use, the faster they are able to solve those problems. The most common method of mining is by using GPU since they carry a ton of computational capabilities.
(rare image of a crypto miner at work)
How it Affects the Tech Industry
Now that we've discussed how mining is related to technology, let us discuss how it has impacted the tech industry:
a) Increased the prices of high-end GPUs
Here the price chart of low-mid ranged GPUs that are not commonly used in mining:
Charts are courtesy of pcpartpicker.com
The prices remain relatively stable despite the ever-present factor of inflation. Let us compare that with the 2 most commonly used GPUs for mining:
You can see a very significant price jump. The reason for this is fairly simple, price is determined by the ratio of demand and supply. The higher the demand and the lower the supply, the higher the price. In fact, the RX 580s and 570s are out of stock almost everywhere.
b) Forced tech companies to create mining specific technology
With the growing demand for powerful GPUs, tech companies are launching GPUs that are optimized to perform mining tasks. NVIDIA is launching Mining P106 while AMD is launching MINING RX 470.
c) Increase in the stock prices of tech companies
Charts are from tradingview.com
Stock prices of NVIDIA and AMD have risen significantly. On hindsight, this might seem like a good thing, higher stock prices means the companies have more money they can use to create better products. But let's fast forward months or years from now when the prices of cryptocurrencies eventually drop, cause what comes up must always come down.
When this happens and mining isn't as profitable as before, both miners and suppliers will be left with GPUs that they bought at inflated prices. These overpriced devices will be resold by the thousands. This influx will drive prices down to a more justifiable level. This, in turn, will have a negative effect on tech companies. This will not only reduce their stock prices but it will also lead to a decreased demand for their latest products. Think about it, who would buy new overpriced tech when they can buy old powerful tech at bargain prices.
Let me know your thoughts in the comments below!
My research tell me that good graphics cards are becoming scarce..
personally I wouldn't invest in these full size cards..There are smaller single slot USB cards that can be daisy chained, so you can add more as your funds grow..
My trade is air conditioning, so I'm just gonna say this; as we all know, the biggest enemy of your system is "HEAT"!!
The second thing is the energy coefficient status of your system, which is also known as the energy spent compared to the work done (profits from the mining)..Then there is overhead expenditures..
Yeah there are a lot of factors to consider when deciding to mine. I know of someone that got in on the hype without doing research. He burned his gpus in 30 minutes. He lives in a hot and humid region with just fans and no A/C. They weren't completely fried but his monitor was no longer displaying correctly.
It's honestly ridiculous how AMD and nVidia have grown from the crypto industry. Apparently they might be launching a Bitcoin mining range of cards soon. Depending on how effective they will be, it might be a good sign to buy up some of their shares.
Yup but as I stated in my post, if the price increase in their stocks is due to the increase in mining then the crash of cryptos, if it does happen, will also have negative effects on them.
True. But when you say 'crash', do you mean crash forever, or temporary market down trends?
Because if it's only temporary, then it's not like so many people will just sell their rigs because of market draw-backs, if anything, they will hold because if the currency's shoot back up, then there is way more profit :)
I'm referring to a permanent crash. It's a big if, but everything is possible.
Best of luck to your investments!
I don't even want to think about a permanent crash thanks LOL :P Good luck my man. I have given you a follow! Talk soon :)
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