Cryptocurrency Miners Bought 700,000 GPUs in Q1 2021

Ever since Ampere’s launch in September 2020, there’ve been questions about how much of the shortage was driven by semiconductors and how much was driven by cryptocurrency demand. Reports over the last 10 months have pointed to various additional causes, including low yields at Samsung, GDDR6 shortages, and ABF (Ajinomoto Build-up Film) shortages. New work from Jon Peddie Research has filled in some blanks on how much cryptocurrency has contributed.

According to JPR, component prices for GPUs have increased by as much as 70 percent. I’m perfectly willing to believe that board manufacturers have boosted their own prices to compensate for that, but the current GPU market remains ludicrously inflated. Component prices may be up 70 percent, but GPU prices have been up 2.5x – 4x.

The data below does not include the notebook market. “DT PC w/o WS” means “Desktop PC without workstations,” meaning Quadro and Radeon Pro shipments are not included here.

Attach rates — the percentage of PCs that ship with a discrete graphics card — have trended downwards in the desktop market, with a very clear bump towards the end of 2020. Note, however, that even as the graphics attach rate has dropped once more, the total number of AIB (Add-In Boards) being sold has skyrocketed. In other words: We’re not seeing a huge demand spike because OEMs like Dell, HP, and Lenovo are suddenly selling lots of systems with high-end graphics cards. We’re seeing a huge spike in AIB shipments because of cryptocurrency mining. The last time AIB shipments sparked like this was 2017-2018. That time period corresponds to the second cryptocurrency bubble.

JPR estimates that miners bought 700,000 midrange and high-end GPUs in Q1 2021, accounting for about 25 percent of the AIB market and roughly half a billion dollars in cash. None of that revenue flows to Nvidia or AMD; it’s all being captured by the channel partners. JPR notes that electricity prices in Mongolia are around 4.5 cents per kW, explaining how these farms remain profitable (and why it’s impossible to compete with them if you have to pay residential rates for electricity).

We don’t know how much of the market cryptocurrency mining ate during Q2 2021, but eating 25 percent of the available market is more than enough to cause a supply shortage. It would also explain why manufacturers haven’t been able to make up for the shortfall. Boosting production by that much isn’t just a matter of running the line a few extra hours that week, and we know there have been supply shortages throughout the industry. That’s only going to exacerbate the problem.

Hopefully, the cryptocurrency market cools off before too long and the GPU market returns to something like normal pricing. It isn’t clear yet if gamers can expect any relief in Q3 – Q4, or if we’ll have to wait until 2022.

Feature image by Jernej Furman. CC BY 2.0

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