Since NVIDIA released its Ampere-based RTX 3000 series GPUs, consumers have struggled to get their hands on one. Now in July 2021, it has been close to a year since their launch, and the market situation has been pretty bad until very recently.
More people are reporting that it's easier to buy a GPU now compared to previous months. The prices are still way above the MSRP, but they're also likely to come down soon.
So, what's causing the graphics card situation to improve all of a sudden? Why are graphics card prices finally dropping?
1. Crypto Market Isn't Bullish Anymore, and Mining Profits Are Down
Shortly after the GPU launch, the cryptocurrency market began to gain traction, and for the first half of 2021, the market was bullish. In other words, the prices for cryptocurrencies were at an all-time high. So, how does this relate to graphics card availability and pricing, you ask?
Well, when cryptocurrency prices are high, it's highly likely that crypto mining is profitable too. Therefore, miners keen to take advantage of the situation for some quick cash stock up on tens or hundreds of graphics cards.
All of a sudden, there's a shortage of GPUs in the market.
You know what happens next, right? The classic supply and demand issue. The increase in demand and the lack of supply cause GPU prices to skyrocket.
Fortunately enough, crypto's bullish run has come to an end. The prices for these virtual currencies have dropped significantly in the past month, and as a result, mining profits are down too. So, miners aren't too keen on grabbing all the available GPUs at exorbitant prices anymore.
2. NVIDIA LHR Graphics Cards
LHR stands for Light Hash Rate, and this was NVIDIA's power move to fight against miners. Let's first examine what this term means and how it impacts GPU mining, alright?
Miners who stock up on graphics cards when the crypto market is doing well rely on the GPU's hash rate to mine digital currencies like Ethereum. NVIDIA's Ampere-based RTX 3000 graphics cards delivered impressive hash rates for Ethereum at launch, which meant miners could mine cryptocurrency faster than they could with the previous generation.
To combat this issue, NVIDIA released LHR GPUs in May 2021, which cut Ethereum hash rates by half. LHR variants are currently available for the RTX 3060 Ti, RTX 3070, and RTX 3080. These models are more easily available than the ones with the fully unlocked hash rate. They're less expensive too.
As NVIDIA pushes out more LHR graphics cards, gamers can get their hands on GPUs rather than miners. This helps a ton in improving the stock situation, and prices come down because of the reduced demand.
3. Production Ramping Up Post-COVID
No matter what you think, we cannot overlook that COVID-19 has had a major impact on GPU shortages. The simple reason for this is chip production and manufacturing.
Most workers have been stuck at home for the majority of the financial year 2020-21. Manufacturing plants in a lot of countries have been functioning at 50% staff capacity. As a result, the production rate was cut in half.
There has been a global chip shortage, too, affecting not only the graphics card market but also cars, gaming consoles like the PS5, and other electronic devices. Apart from the pandemic, the trade war between the US and China also shoulders some of the blame.
Since all countries are now vaccinating against COVID-19 and many are lifting restrictions, production is slowly ramping up to meet the current demand. This should begin to alleviate stock issues in the coming weeks.
4. The RTX 3080 Ti Is Easier to Make than the RTX 3090
When a product is easier to make, it can be manufactured faster. NVIDIA's RTX 3090 is the most expensive Ampere GPU that you can currently buy. Since it's the highest-end model, NVIDIA often reserves the best components for this particular model by a process called binning. Here's how it works:
The RTX 3080, 3080 Ti, and 3090 models use the same GA102 die. However, they're sorted differently based on how good they are. Some of these GA102 dies are perfect for the RTX 3090, whereas others aren't. These lower-quality dies make their way to the RTX 3080 and RTX 3080 Ti models.
NVIDIA marks the lowest-tier die as the GA102-200, and it goes into the $699 RTX 3080. Thanks to the new RTX 3080 Ti, NVIDIA now has a middle ground for the binning process. The chips that are too good to be on the RTX 3080 but not perfect for the RTX 3090 make their way to the RTX 3080 Ti. This is exactly why there's a $200 price gap between the two models.
With the release of the RTX 3080 Ti, NVIDIA can make sure there's no chip wastage during manufacturing, and they can easily make more graphics cards with lower-tier dies. This speeds up production overall and improves the stock situation at hand.
5. People Got Tired and Settled for Alternatives
At first, when the GPUs came out, most of the prospective buyers thought the supply would improve in a couple of months or so, but unfortunately, that wasn't the case. Instead, the crypto boom made it worse, and NVIDIA didn't (or couldn't!) address it for months.
The situation got worse to the point that people just stopped caring about these new graphics cards, especially with the absurd price tags. Many people were trying to grab one at MSRP settled for used or older-gen graphics cards for the time being. Some gamers who just wanted to play games bought a new console instead for a fraction of the price.
All of this has reduced the demand a little bit, meaning those who held out will now find it easier to get a graphics card for once.
GPU Prices Are Coming Down
If you're a gamer, this is great news. You can finally get your hands on the latest graphics card in the coming weeks and finish your PC build. However, we expect the prices to remain above the MSRP for at least the next few weeks, potentially extending in months. So, you would do yourself a huge favor by waiting just a little longer.
On the other hand, if you're looking to buy a new graphics card for mining, you'll still struggle to find one since non-LHR GPUs are a rare sight now. And even when they do show up somewhere, you'll have to burn a hole in your pocket to own one.