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Ethereum (ETH) is set to shift to a proof-of-stake (PoS) model later this year, which will see the token forsake traditional mining for staking. But this move has the added impact of reducing the prices of graphics cards (GPU), which are a popular tool for mining the world’s second-largest cryptocurrency.
A surge in crypto’s popularity through 2020 had caused a corresponding hike in GPU prices. Coupled with a global chip shortage, GPU prices had reached astronomical levels by 2021.
ETH is also one of the most mined currencies using GPUs. While Bitcoin (BTC) mining was also initially done through GPUs, the token’s high hash rate has seen miners switching to more specialized technology, such as custom-built chips.
Is ETH move to PoS driving GPU price down
Recent reports showed that the cost of high-end GPUs from Nvidia, a staple in crypto mining, had dropped nearly 30% in the past two months. GPU prices in China were already plummeting after the country’s crypto ban, but this trend also appeared to have spread to foreign markets.
Nvidia GPUs in Australia and Germany were seen nearly halving in price, while those made by Advanced Micro Devices (AMD) saw an average decline of 13%.
The GPU market also appeared to be flooded with second-hand cards from former miners, especially from countries such as China and Kazakhstan, which have outlawed the practice.
ETH likely to ditch mining this year
The Ethereum blockchain is set to switch to a PoS model later this year, a move that will cut ETH’s computational requirements by nearly 100%. The blockchain earlier this month tested out an early implementation of the PoS model.
The move boosted ETH’s price to back above $3000, and is largely expected to be bullish for the token, by making it more accessible to non-miners and nearly negating its environmental impact.
Still, a rally in Ethereum Classic (ETC), an older, mining-centric version of Ethereum, has fuelled speculation that existing ETH miners could pivot into the other token. As such, ETH mining may not die down completely.
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