Expensive Graphics Cards and Mining Cryptocurrency

If you’ve wondered why graphics cards are so expensive – new or used, you might have wondered why. You might have also been told that it’s due to people using these graphics cards for mining, and then been annoyed that you have to pay a lot of money to get a better graphics card. Or maybe that’s all just me… but I’ve been looking into this, and playing with mining cryptocurrency; here’s what I learnt.

I bought a new PC for home with the following specifications:

The key component here is the NVIDIA RTX 3080 graphics card, and you’re lucky to get one at the time of writing for $2000AU. When NVIDIA first launched the 3080 amongst other cards in late 2020, their RRP was $1139AU. A huge price increase – so why does mining cryptocurrency affect the pricing?

To actually use your GPU to mine can be incredibly easy. Platforms such as Nicehash let you set up within a few minutes, and just run a piece of software that sorts it all out for you. The barrier to entry is very low with methods like this, and Nicehash act as a service to allow people’s GPUs to mine cryptocurrency, take a cut of the money made, and pay the people doing the work in bitcoin (and to clarify, Nicehash aren’t getting their users to mine bitcoin itself, but several other options are available – and the market constantly changes, so there’s not one particularly good ‘coin’ to mine).

There are other options such as mining Ethereum, or using HiveOS – and I’m not recommending Nicehash in particular, but it’s the one I’ve tried and makes explaining things easier.

Coming back to my above computer – if I chose to run Nicehash, they have a calculator to show how much you could make:

Ignoring electricity costs (I’ll get to that later), running the Nicehash software based on the time of writing’s Bitcoin to AUD rate, I would get paid $5.38AU of bitcoin each day.

If my RTX 3080 cost $2000AU to buy, and I left Nicehash running on it, it would take 371 days to pay for itself – if the value of Bitcoin didn’t change. At 371 days, I also still have the RTX 3080. You can probably see the problem here already, and why so many people are now mining cryptocurrency.

Historically, the value of graphics cards drops as new models come out. However, due to crypto, value has gone up. Supply can’t meet demand, and older cards have increased in value because they can pay for themselves, then start making profit with enough time and power. The NVIDIA GTX 1080 Ti which came out in 2017 at a RRP of ~$900AU. They’re still worth about that on the second hand market, because:

Buying one for $900 would take 281 days to pay for itself. That’s better value than my new 3080.

Nicehash have a list of cards, recommended general overclocking settings, and the expected performance on one particular type of coin. the MH/s is a million hashes per second measurement, which is the actual work your card needs to do to make money:

Also note that some of the newer cards are ‘Lite Hash Rate Limited’ or LHR. This is due to NVIDIA trying to make the new cards less lucrative to miners, which is what my card is. The market for newer, non-LHR cards is of course stronger with the market paying much higher amounts for these cards, being twice as efficient. Spending $3000AU on a non-LHR RTX 3080 could make more financial sense than $2000 on a LHR RTX 3080.

Of course power isn’t free – unless you have solar during the day, and enough batteries at night, so there’s running costs to consider, and the other hardware required to run the GPU. There are mining rigs that can be built fairly cheaply, running many cards at once back to a motherboard/CPU/GPUs to provide more MH/s and therefore profit:

In these rigs, devices called ‘PCIe Risers’ are used to connect the GPU back to the motherboard. The GPUs would normally need a 16x PCIe slot, but these adapters can connect to a 1x PCIe slot – so a motherboard with lots of PCIe slots is what people look for in a mining rig. Plain USB can also be used, like this Asus motherboard with 20x USB ports on the motherboard itself:

None of the above is definite – things that happen in the world affect the value of cryptocurrency – including events like China banning cryptocurrency altogether which can throw values up or down. While there’s enough money in cryptocurrency though, this will continue; unless there’s an absolutely huge market crash (which could happen just like in anything lucrative). NVIDIA could work out how to build newer cards that are worse at mining, while still being better at gaming graphics – but new NVIDIA cards aren’t due out until late 2022. AMD has a similar problem as NVIDIA, with similar profits being possible.