Ethereum mining has not been a very profitable business for a couple of months now, but the recent drop of ETH price has not only affected miners’ profitability, but also spot prices of graphics memory, such as GDDR5 and GDDR6. Cheaper SGRAM on the spot market could potentially affect contract prices of graphics memory, yet do not expect retail prices of graphics cards (especially higher end graphics cards used for demanding games) to decrease in the coming months because of GDDR spot price drop.
ETH prices fell by more than 50% within a two-month period as regulators in countries like China and Turkey implemented measures to circumvent speculation of cryptocurrencies and illegal/semi-legal mining. In Q1 2021 about 700 thousand of graphics cards sold to miners. according to estimates from Jon Peddie Research and many of these graphics cards were made using GDDR6 memory sold on the spot market. Now demand for these boards is either gone or is about to. Lower demand for cards and memory means lower prices, yet there is a catch: the vast majority of graphics cards use memory that is supplied under contracts with appropriate pricing.
“Even though spot prices are still higher than contract prices for GDDR6 chips, the difference is rapidly shrinking,” TrendForce’s findings reveal. “This, in turn, will have an adverse effect on the general price trend of GDDR6 chips in the future. The trading is even more subdued for GDDR5 chips that are used in the earlier generations of graphics cards.”
Makers of graphics cards and developers of GPUs (which sell many of their high-end chips, such as Nvidia’s GA102 with memory) have supply contracts with makers of memory and reconsider prices once in a quarter. Because makers of DRAM prioritize production of high-margin server memory, have long-term supply contracts with PC OEMs and relatively low volumes of GDDR memory needed by the industry, GDDR5 and GDDR6 chips are rather expensive in general. Meanwhile, prices of GDDR SGRAM have been gradually increasing in the recent quarters, according to TrendForce. In fact, analysts from the company expect contract graphics DRAM prices to increase by up to 15% in Q3 and then by up to another 10% ~ 15% in Q4. In the best case scenario they are going to stay flat with Q3 though.
Another factor that affects demand for graphic cards and therefore prices of GDDR6 memory (used on majority of them) is secondhand market. Since profitability of ETH is not high these days, loads of miners are selling off their hardware, which influences retail prices of graphics and indirectly affects prices set by distributors and manufacturers.
Speaking of secondhand graphics cards, we should mention that TrendForce is not the only one to mention these boards and their influence on the market. Palit Microsystems recently gave an interview to Benchmark.pl (via PCGamer) website and said that graphics cards used for mining can lose some 10% of performance a year due to working under constant load and thermal stress. While we doubt that a graphics card’s wear can be quantified with such a precision, the general idea is that a gamer should avoid secondhand graphics cards previously used for mining.
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