Ethereum’s Proof-Of-Stake Switch, Lower GPU Price Triggering Weaker Cryptomining Demand


  • Ethereum is nearing its move to proof-of-stake
  • When this happens, it will not need Ethereum miners
  • Ethereum was trading up 4.79% at $3,004.10

The heyday of Graphics Processing Units (GPUs), which are widely used for cryptocurrency mining, is coming to an end as demand weakens and prices begin to fall, with Ethereum nearing its goal of migrating to a proof-of-stake (PoS) model.

The price of popular GPU models available on eBay has dropped 37% since May last year after China launched a crackdown on crypto mining in the country. Since then, the pace of price decline has accelerated, which could be attributed to weaker demand as Ethereum’s migration to proof-of-stake approaches.

For context, GPUs are considered necessary hardware in cryptocurrency mining on the Proof-of-Work consensus mechanism used by crypto miners to mine crypto assets like Bitcoin. In this configuration, a decentralized network of computers validates transactions.

Hackers linked to North Korea are responsible for the March 2022 theft of $620 million in ethereum, a type of cryptocurrency Photo: AFP / INA FASSBENDER

Ethereum’s imminent move to a proof-of-stake system, called The Merge, will make GPU redundant since in the new system, users will be able to validate transactions and create new blocks by staking or blocking Ether.

Prices for the industry’s leading GPU models are plummeting this year, starting at 7.4% in January, 9.5% in February and 12% in March. An Easter weekend roundup by 3D Center Germany reported that AMD GPU prices fell 13% on average while Nvidia GPUs fell 6%.

Susquehanna analyst Christopher Rolland noted earlier that the markup over the manufacturer’s suggested retail price (MSRP) had fallen from 77% to 41%. On top of that, a report released this month by Tom’s Hardware revealed that Nvidia RTX and Radeon RX GPU prices were down month on month.

The report claims that many of these GPUs are seeing their prices drop by more than 10%. Apart from that, the site revealed that several retailers are holding stock for days without selling out, which was unheard of in 2020 and 2021.

Earlier this month, Ethereum Foundation developer Tim Beiko said the merger might not happen anytime soon. “It won’t be in June, but probably in a few months. No specific date yet, but we are definitely in the last chapter of PoW on Ethereum,” he tweeted.

Ethereum was trading up 4.79% at $3,004.10, with 24-hour volume of $21,073,561,478, as of 12:46 a.m. ET Tuesday, based on data from CoinMarketCap.

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