Forget software. In 2021 it will be cryptocurrencies that are eating the world. Thanks to miners looking to make it rich in cryptocurrencies like Ethereum and Dogecoin, prices in the consumer graphics card market are skyrocketing – if you can even find a graphics card in stock.
“Lite Hash Rate”
; GPUs Are For Gamers
Hoping to make it easier and cheaper for gamers to upgrade their rigs for the latest AAA titles, NVIDIA has announced new “lite hash rate” (LHR) versions of existing RTX GPUs. These cards are designed to make it more difficult to mine cryptocurrency without reducing game performance.
This is already the second time in 2021 that NVIDIA has attempted this. The company’s plans exploded spectacularly in March 2021 when the company accidentally unlocked its own software-based anti-mining protections for the RTX 3060 graphics card. Now the company is trying again with much greater pressure against mining, and it comes not a moment too soon.
For example, if you look at major online retailers, you’ll see that NVIDIA GTX 1650 prices start at around $350 and top out at nearly $600. That’s for a graphics card released in April 2019 and revised a year later with a original retail price of $150.
The reason these cards are priced so high is that major retailers are completely out of stock and sell out quickly when they get a shipment. Third-party sellers, meanwhile, want to make quick money with big profits.
The reduced retail inventory is happening because 2021 has been a strange year for graphics cards. The pandemic and social distancing were still strong at the start of the year, increasing the demand for stay-at-home entertainment. Then there were supply chain problems, international shipping delays and finally our friends wanted to make it rich from their basement mining operations.
What is cryptocurrency mining?
Cryptocurrencies such as Bitcoin, Ethereum and Dogecoin are produced by so-called mining. This means that computers try to win digital coins by calculating math problems as quickly as possible. These math problems are part of the blockchain system, the ledger that keeps track of transactions for a specific cryptocurrency. The first person to verify a transaction by solving the math problem is presented with a freshly minted new coin.
Needless to say, anyone who mines enough of these coins can make some serious dough in no time. For example, consider that a single Ethereum digital coin is worth about $2,700 dollars at the time of writing. However, mining costs electricity and you need the right hardware to mine cryptocurrency quickly and profitably.
Graphics cards are currently the ideal hardware for mining the trendiest cryptocurrencies. GPUs are built for solving math problems because to run a video game, they have to calculate tons of math in parallel operations. That fundamental feature makes them ideal for cryptocurrency mining.
Bitcoin, the grandfather of cryptocurrencies, was also mined with GPUs at one point and it also put pressure on the consumer graphics card market. Specialized hardware that was even better for mining Bitcoin, called ASIC rigs, took the stress off the market. ASIC rigs for other cryptocurrencies have not taken off in the same way for reasons beyond the scope of this article.
The bottom line is that most cryptocurrencies, with the exception of Bitcoin, are largely mined by graphics cards. Often a single miner can have dozens of cards at once with the hopes of making some serious money. Multiply that demand for dozens of cards by thousands, and you understand why mining is contributing to the current shortage.
NVIDIA’s LHR Battle
Hoping to get more cards into the hands of gamers rather than cryptocurrency miners, NVIDIA announced its LHR program in mid-May 2021. This program means that newly manufactured graphics cards RTX 3080, RTX 3070 and RTX 3060 can detect Ti when it’s being reused for cryptocurrency mining of Ethereum. When that happens, the cards intentionally reduce their hash rate by about 50% for solving Ethereum-related math problems. Since these RTX cards originally launched without a reduced hash rate, the newer LHR models will be labeled as such on the box and in product listings.
The LHR program makes these cards less useful for miners, but NVIDIA doesn’t leave miners out in the cold. To cater to the mining frenzy, NVIDIA has also announced GPU models specific to the cryptocurrency market, which could also reduce demand for mainstream consumer cards.
NVIDIA says game performance is not affected by LHR cards, as it is only designed to slow down Ethereum workloads. Ethereum is a popular currency and there are many Ethereum based projects and clones. But Ethereum is not the only type of coin that is putting pressure on GPU demand. For example, Dogecoin is not based on Ethereum. Presumably an LHR graphics card would not detect its mining.
Even if it reduces demand from miners, it’s not clear whether the LHR program will bring graphics cards back to store shelves. The RTX 3060 with anti-mining protection was still selling out fast when it was released earlier this year. There’s no reason to think the same isn’t true for NVIDIA’s other RTX cards, especially when there’s a lot of pent-up demand from gamers.
Nevertheless, LHR is a step in the right direction and will hopefully make graphics cards more readily available.
Of course, that’s assuming NVIDIA doesn’t shoot itself in the foot again and release a software update that kills the anti-Ethereum mining protections.