# Opinion: when will graphics cards drop in price?

**Over the last year, we have seen the price of graphics cards go up. All this is because they turned out to be a workbench for cryptocurrency production. Besides, global manufacturers don't seem to be in a hurry to boost production, justifying it by the fact they have problems with chip supply. However, I guess I know when their prices are going to drop. Let me prove my point using some logic and calculations. **

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My key thesis is that **video card prices will fall when Ethereum switches from Proof-of-Work consensus to Proof-of-Stake.** Why?

First, we all know that the second most capitalized cryptocurrency Ethereum is going to switch from Proof-of-Work consensus (mining new digital coins) to Proof-of-Stake (storing digital coins). The launch date gets postponed again and again, but it is expected to happen in the summer or fall of 2022.

The second thing is that I believe that video cards are mostly used in Ethereum mining, and not ASIC (I'll give some explanation below). If Ethereum stops mining, it will free up a huge amount of capacity that won't be in demand. Many miners expect to simply switch to creating other digital coins, but as I mentioned above, for a reason, Ethereum is the second most capitalized cryptocurrency. Moving to the third or fourth most capitalized coins will cause extra capacity there, meaning there will be more competition for every coin mined. It will collapse the profitability of miners (the only exceptions are those who steal electricity or have a mini-electric power plant made of renewable energy sources, as they will still benefit from mining).

Thirdly, when profitability decreases, many miners will try to get rid of an excessive number of video cards, even though their prices are quite high now, so it is possible to make money on this as well.

**Proofs**

**Ethereum mining involves numerous video cards. **

Ethereum's current hash rate is 985.78 TH/s. In mid-2020, the first Innosilicon A10 Pro 500Mh ASIC was introduced, a special device for mining. Let's add a few more months from the presentation to the delivery and introduction into the mining farms and measure the hash rate at that point (October 2020). Up to that moment, the digital coins were added mainly via video cards (we don't consider CPUs, as they have low efficiency). In total, we have 250 TH/s.

Here, I make a conscious decrease in the numbers since, after October 2020, more and more video cards continued to be connected to mining. However, it is impossible to determine how much power they have without considering ASIC. Let's take it as compensation for CPUs, which we have compared to GPUs.

Now, let's go to the Whattomine website and find out the hash rate of 10 GeForce 3090 video cards in all popular mining algorithms (except NeoScrypt - the website showed nothing there, and RandomX - Monero mining algorithm is not optimized for using video cards).

Next, we use the same website to calculate the hash rates of each algorithm. And then, we do the simple math: we calculate which algorithm has the largest share compared to the others.

So, as you can see from the table, the Ethash algorithm share is 72.32%. That is, more than two-thirds of video cards work for Ethereum mining and not for some other cryptocurrency.

By the way, a month ago, I made similar calculations, and at that time, the share of this algorithm was slightly more than 79%. I explain the drop level due to the increased complexity of the algorithm.

**Mining profitability drops**

Now let's assume that Ethereum has switched to Proof-of-Stake. The capacity of miners was released, and they decided to switch to mining other coins. Even if they are distributed equally over all algorithms (unlikely), it will reduce the profitability by at least 4 times (and in fact, even more)! Therefore, the payback time increases, and some coins will become loss-making.

I intentionally lowered the figures in my calculations to show that miners will face a huge drop in income even in the best-case scenario. And what if we assume that the level of video cards in Ethereum is not 250 TH/s, but more? I don't really believe that only a quarter of today's 1,035 PH/s is provided by graphics cards and the rest by ASICs. What if you calculate not the algorithms but each digital coin? The numbers would be even worse.

**Getting rid of surplus video cards**

Unless the miners have some kind of free power (till the other miners leave), they have two options: to sell the excess video cards, which are currently in short supply and cost a lot, or to freeze their farm until better times come.

In case I was wrong about anything, I would be glad to know some arguments why. If possible, along with some calculations and estimates=)