Gamers and miners have been at odds since cryptocurrency miners discovered that the graphics processing units (GPUs) used to process the demanding visuals for modern PC games could be turned to the task of crunching numbers to generate crypto. Miners have been snapping up GPUs as soon as they become available, sending prices soaring and leaving gamers frustrated.
Last week, those tensions threatened to boil over when word got out that Nvidia’s so-called hash-rate limits, which are used to reduce a chip’s productivity when mining cryptocurrencies like Ethereum, had been hacked.
The story was quickly debunked, with experts claiming that bypassing the restrictions, which reduce RTX 3060 crypto mining capacity by 50%, was nearly impossible. Several reports have since alleged that a beta driver release circumvents Nvidia’s restrictions.
The outcry reflects increasing concern in the chip industry, as major manufacturers such as Nvidia and AMD attempt to meet the demands of both gamers and cryptocurrency miners. It comes as a result of a rise in crypto mining revenues, which has caused mining companies to rush to buy up inventory, resulting in skyrocketing GPU prices.
Meanwhile, chipmakers are hampered by a shortage of raw materials and perplexed by Ethereum’s shift to a proof-of-stake consensus model, which will eventually eliminate mining entirely.
Nvidia released a dedicated chipset for crypto miners in February of this year, focusing on Ethereum. Simultaneously, it slowed down the hash rate of its new RTX 3060 GPUs in an attempt to make them less appealing to crypto miners.
The chipmakers’ actions were in response to gamers’ concerns about GPU shortages caused by mining demand. According to Nvidia, Ethereum was chosen because it had the highest mining yield among GPU-mineable coins.
However, due to chip shortages, crypto miners have resorted to using gaming laptops to get an extra hash rate and profit from bull-run profits. So it came as no surprise to some when screenshots from the Twitter account @I Leak VN indicated that enterprising Chinese Ethereum miners had discovered a way to circumvent the restrictions.
Meanwhile, AMD, Nvidia’s main competitor, is rumoured to be working on its own dedicated mining chipset, the latest version of the AMD Navi 12, which was first used in the Apple Macbook Pro. According to PC Gamer, it doesn’t have any video outputs, which are required for gaming. That means the GPU will be the company’s first crypto mining-specific CPU, and it’s aimed at Ethereum miners specifically.
Both AMD and Nvidia have recently taken steps to separate GPUs used for crypto mining from those used for gaming. However, not everyone agrees that this is the best approach for multinational companies to follow.
Ethereum mining revenues soar
Nvidia won a landmark lawsuit earlier this month, dismissing claims by investors that the chipmaker hid its dependence on its burgeoning cryptocurrency mining business to the tune of more than $1 billion. Investors worried that Nvidia’s profits were becoming too closely entwined with the volatile cryptocurrency market started the action two years ago.
Now, things are a little different. Following PayPal’s decision to incorporate cryptocurrencies and high-profile investor interest, crypto mining has seen a rise in popularity. According to a report released this month, this led to a large increase in GPU sales in Q4 2020, with shipments up 20.5 percent quarter-over-quarter and 12.4 percent over Q4 2019.
The report’s authors, Jon Peddie Research (JPR), suggested that mining, especially on the Ethereum network, played a significant role.
Even from last year’s peak during the craze for decentralized finance (Defi) last summer, Ethereum network fees collected by miners have more than doubled this year, and miners’ income has tripled. According to mining researchers, no other cryptocurrency gets close to Ethereum in terms of mining profitability right now.
On the other hand, the network’s average transaction fee reached $38.21 on February 23, rendering it unviable for lesser transactions (and impact on activity in the burgeoning Defi space). Ethereum 2.0, the ongoing update, is intended to address these issues.
In the meantime, Vitalik Buterin, the co-founder of Ethereum, has suggested temporary scaling measures. Some community improvement plans have been met with skepticism by miners, who fear a 50 percent reduction in their fees. Block rewards would be lowered by 0.25 ETH every quarter under a new plan, EIP-3368, to help miners cope with Ethereum’s transition to proof-of-stake.
As the Ethereum blockchain network transitions to Eth 2, JPR predicted that demand for GPUs among crypto miners would slowly decline.
This, though, will take some time. The network will be upgraded in stages, with the final upgrade not taking place until 2022—assuming no delays.
Another proof-of-work cryptocurrency may emerge by then, but most so-called third-generation blockchains, like Cardano and Polkadot, have launched with proof of stake, making that unlikely.
Miners can’t switch to Bitcoin, Bitcoin Cash, Litecoin, or other well-known proof-of-work coins because they use a different hashing algorithm.
So, at least in the long run, gamers may have no cause for concern. , any old graphics cards they may have lying around may be worth a lot of money to an Ethereum miner.