Over the past couple of years, we have seen cryptocurrency miners buying up so many graphics cards that shortages have been felt worldwide. While many factors contributed to the recent GPU shortages, cryptocurrency mining was a major leading cause. Before the Ethereum Merge, mining profitability made it highly lucrative to use graphics cards for mining cryptocurrency.

But, at last, the long-awaited Ethereum Merge has finally happened. Ethereum 2.0 has been on the horizon for several years, and now that Ethereum has officially upgraded, we are left with a host of both positive and negative side effects.

In today’s article, we will look at some of the effects of the Ethereum Merge on the GPU market and some of the pros and cons of the whole situation. We’ll also explore how we got to this point and what the Ethereum Merge means to the future of both cryptocurrency and the technology used to mine it. With Ethereum 2.0, we may be in for an abundance of graphics cards, but how did we get here? Let’s find out!

How GPUs Are Used in Ethereum Mining?

GPUs have always been favored in cryptocurrency mining due to their increased power potential versus a CPU. Since GPUs offer processing power and the ability to execute more “instructions per clock,” their potential is significantly higher. While CPUs were initially used to mine cryptocurrency, GPUs were quickly found to be more efficient.

While GPUs have historically been used for gaming, their powerful processors make them ideal for cryptocurrency mining. A key component to determining how effective a particular GPU is for mining is the hash rate. The cryptocurrency hash rate measures a GPU’s computing power, which is a critical security indicator.

As GPUs became even more powerful over time, hash rates increased, leading to modern gaming graphics cards being highly lucrative to use for mining. This phenomenon has led many to buy gaming graphics cards specifically for the purpose of mining. As more and more miners saw the profit potential of GPU mining, graphics card makers like AMD and Nvidia began to take notice.

When the 3000-series launched, Nvidia included antimining software to limit the hash rate. With a lower hash rate, miners would be discouraged from using GPUs to mine cryptocurrency. Unfortunately for gamers, GPUs remained profitable for mining. This led to miners buying large stocks of graphics cards before gamers could buy them. 

What is the Ethereum Merge?

The Ethereum Merge was initially proposed in December of 2020 and is an upgrade to the Ethereum network intended to increase its overall efficiency. To achieve this, the Merge completely rethinks how transactions occur on the blockchain.

Before the Merge, the Ethereum blockchain worked similarly to the Bitcoin blockchain by using the “proof-of-work” model. Proof-of-work generally consists of a network of nodes competing with each other to solve complex mathematical computations. Miners would build powerful networks of computers specifically for the task of mining cryptocurrency. 

While this method has been used for many years, its shortcomings led developers to create a better solution. The new “proof-of-stake” model rethinks the way the Ethereum blockchain works. Instead of performing complex calculations to generate new cryptocurrency, proof-of-stake requires miners to hold at least 32 ETH units to prove they have a stake in the network’s success.

What Are the Ethereum Merge Pros and Cons?

Once the Merge took place on September 15, 2022, profitability for mining plummeted overnight. Your typical RTX 3090 was capable of grossing nearly $3 per day before the Merge. That figure is now drastically reduced. Based on mining profitability tests run shortly after the Merge, an RTX 3090 will now produce less than $1 daily, even with the most efficient mining algorithm.

However, despite the bad news for cryptocurrency miners, there are far more advantages than disadvantages to the Ethereum Merge.

Perhaps the most significant advantage to the Ethereum Merge is the energy savings. While the old proof-of-work model required intensive computations and excessive energy use, the new proof-of-stake model is significantly more efficient. Since the Ethereum Merge took place, energy consumption and carbon emissions have been reduced by over 99%.

The effects of cryptocurrency on climate change have always been a hot topic of debate when discussing Ethereum. Since Ethereum allegedly accounted for 0.02% of the world’s power consumption, reducing the network’s carbon footprint has been necessary since its inception. Now that the Ethereum network is substantially more energy-efficient, it will be able to continue growing and improving.

Additionally, it is rumored that Ethereum’s $60 billion ecosystem will be more secure and scalable than ever. This ecosystem, consisting of cryptocurrency exchanges, lending firms, non-fungible token markets, and other applications, will stand to benefit immensely from improved security.

Ryzen-vs-Intel-GPU
GPUs have been used in large numbers for cryptocurrency mining.

What the Ethereum Merge Means for GPU Prices

Mining profitability dropped to record lows as soon as the Merge took place. Not only was it impossible to make money with mining once the Merge took place, but miners actually began operating at a loss due to the cost of electricity. The effects were almost instant.

Surprisingly, the price of the Ethereum token itself did not make any significant moves after the Merge. The same could not be said for graphics cards. It is speculated that around 20 million GPUs worldwide are used for mining. Since mining is no longer profitable, these GPUs are essentially useless for mining.

The price of GPUs has already begun to plummet. Miners are offloading graphics cards in quantities never seen before. While the price of GPUs has been sliding for a few months, the Ethereum Merge is the final push off a cliff. 

This surplus of used graphics cards could affect the retail market, as well. With a massive surplus of 3000-series cards up for grabs, many buyers opt for cheaper used cards instead of brand-new models. To top it off, many of the used graphics cards that are hitting the market are being offered at heavy discounts due to excessive wear and tear from mining. 

The Ethereum Merge comes at the same time as famed GPU manufacturer, EVGA, abandoned the industry entirely. While EVGA has been the largest supplier of graphics cards in North America for years, they will no longer deal in GPUs. Though EVGA split from Nvidia for many other reasons as well, the Merge is the final nail in the coffin for GPU profitability.

The Effects of the Ethereum Merge on GPU Prices FAQs (Frequently Asked Questions) 

Did the Ethereum Merge happen?

Yes. The Ethereum Merge took place on September 15, 2022.

How does GPU mining work?

GPU mining works by using your graphics card to perform a series of complex calculations. Other systems on the Ethereum network will perform these calculations simultaneously, competing with each other.

Is GPU mining profitable now?

As of the Ethereum merge, mining the vast majority of cryptocurrencies is no longer profitable. In fact, due to the cost of electricity, most GPUs will mine at a substantial loss.

What coins can still be mined?

While Ethereum mining is no longer profitable, you can still mine other coins like Ravencoin, BitcoinZ, ERGO, and FLUX.

Is GPU or CPU better for mining?

The CPU used to be a preferred tool for mining cryptocurrency, but it was quickly overtaken by GPU mining. GPUs were better at mining until the Ethereum Merge. Now, GPU mining is largely obsolete.

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