Graphics card prices have collapsed in China and will continue to decline

With the growth in mining volumes and the frenzy of video card dealers in recent years, the prices of video cards have exceeded the psychological expectations of the players. A good graphics card has even become a luxury item, but the recent news of graphics card price cuts has rattled many in China.


Recently, the price of graphics cards in the market has fallen sharply, ending more than a two-year price increase regime. What is the reason for the sharp decline in prices for video cards? How big is the fall?


In Huaqiangbei, Shenzhen, known as China's "Electronics First Street", many kiosks are stocked with boxes of popular graphics card models. Vendors have reported that the prices of video cards of various brands have fallen sharply, and current prices are close to a two-year low.


Merchant in Huaqiangbei, Shenzhen: Now the price has dropped, and some have dropped by about 1,000 yuan in the last month.


Not only did prices drop at offline stores, but so did the prices of graphics cards on online e-commerce sites and second-hand marketplaces. Taking one of the most popular graphics cards, ASUS RTX 3080, as an example, the price previously reached almost 20,000 yuan at the highest level last year, and the current price is less than 7,000 yuan, which is a price drop of almost three times. The market demand and price of video cards are closely related to the prices of virtual currencies such as Ethereum.


Merchant in Huaqiangbei, Shenzhen: This card used to be used for mining, but now this card cannot be mined.


Industry insiders believe that the drop in graphics card prices is due to the legal status of virtual currency in China. In September 2021, the National Development and Reform Commission of China and other departments jointly issued a "Notice on Correcting Virtual Currency Mining Activities." After that, ten departments, including the People's Bank of China, issued a document to prevent and eliminate the risks associated with virtual currency, making it clear that commercial activities related to virtual currency are illegal financial activities. As the policy continues to tighten, the price of the virtual currency has fallen, the “mining tide” has gradually receded, and the prices of graphics cards have also begun to plummet.


Many speculators were forced to cut prices due to high early stage prices, and a large amount of inventory fell into their hands, resulting in large losses. In the future, when the demand for video cards in the market will decrease and the supply will increase, the prices of video cards may still fall.


Different virtual currency systems have different requirements for mining machines, among them, the Ethereum mining machine is based on a video card. Since the second half of 2020, the price of Ethereum has continued to skyrocket, attracting many players to it, and the prices of video cards have risen accordingly, making it difficult to find a card frequently.


Many speculators took the opportunity to stock up on video cards earlier at low prices and planned to sell them on the market after the price increase. However, since virtual currency is not as profitable, a large number of miners have gone out of business, and graphics card prices have dropped significantly. These players own a lot of inventory and face a dilemma.


Merchant in Huaqiangbei, Shenzhen: The price of a video card is going down, but they don't want to sell, you lose three or four thousand. If everyone is selling, the price drops faster. Release the product slowly, 100 pieces a day. When they receive a product, they receive it at a premium.


Even though graphics card prices have dropped significantly, the prices of popular graphics cards on the market are still above the official reference price. A 3DCenter report shows that last December, the premium for Nvidia and AMD graphics cards exceeded 80% of the initial suggested retail price, and it is still 25% higher than the original suggested retail price.


At the same time, on the demand side, an update of the Ethereum blockchain system is expected in the second quarter of this year, when the Ethereum consensus mechanism will be changed from Proof of Work to Proof of Stake, which means node operators only need to stake a certain amount. You can earn income in the form of verification nodes, and you no longer need to use mining machines with video cards for mining. Some sellers predict that in the future, speculators may release a large number of goods, and the price of video cards will fall even more.


Yu Jiangying, Executive Director of the Metaverse Industry Committee of the China Mobile Federation: Miners generally no longer buy new video cards, but start selling them in large quantities, in which case the price of video cards will decrease.


On the supply side, graphics card manufacturers have been improving their supply from this year. In January 2022, shipments of the RTX 30 series increased by 15% compared to the end of last year. Major graphics card manufacturers such as Nvidia and AMD have said they will increase investment this year to meet market demand for graphics cards.