Why Are Graphics Cards So Expensive?

Despite being one of the very few who have been able to get a graphics card without spending $500 lately, there is still a possibility that you may end up spending much more than you thought you would. Among those of us who are a bit more knowledgeable about computing, there is little doubt that the GPU plays a crucial role in today’s computing architectures, and is arguably one of the key components in the gaming industry.

A typical PC gamer and graphic designer, as well as those who work in the PC building industry, are finding it harder and harder to stay current with the latest technological advancements and components. The purpose of this article is to explain why graphic cards these days are so expensive from different perspectives. We walk through history, from the era when companies were racing to deliver superior GPU hardware, to the present, when retailers are affecting the market through their choices.

GPU Price Hike: Is it Real?

In the world of games and graphic design, graphics cards have proved to be the most essential hardware since they are equipped with dedicated video memory and a graphics processing unit (GPU), which is capable of rendering millions of polygons and calculating numerous factors, such as mapping textures.

We’ve all noticed a dramatic increase in prices in recent years, but have they really gone up? Throughout 2020 and the first half of 2021, prices have continued to increase, which is why purchasing upgrades has become quite difficult for all of us. There has been a significant price hike in GPU products from Nvidia, particularly the 900-series products, since 2016, which has made them unaffordable. Although each of Nvidia’s 10-series graphics cards features numerous so-called budget-friendly upgrades, starting with the cheapest GTX 1080 Ti to the GTX 1070 and GTX 1060, budget-friendly GTX 1050 Ti and GTX 1050, but they are still out of reach for individuals who are just starting out in the building of personal computers. Could it be that we are going to have a better year than last year?  The recent rise in prices for Radeon RX 6000 series graphics cards have been offset by a decrease in prices for cards from the GeForce RTX 30 series. People pay 59 percent over MSRP for GPU hardware from NVIDIA, while they spend 64 percent over MSRP for AMD hardware.

In addition, after coming down from its peak in mid-May, the Radeon RX 6000 series also began to rise again in July, gradually returning to the peak in mid-May. The price of the GeForce RTX 30 series had begun to rise 200 percent higher than of the middle of May, however, the price plummeted over the following weeks, eventually dropping to only 44 percent higher than its MSRP by the end of the year. However, despite the fact that these prices are not as outrageous as they once were, they are still quite high when compared to the recent past. According to the current market, the cheapest card is the ASUS Dual GeForce RTX, which is currently selling at the price of $800, and there are several other cards on the market including the Zotac GeForce RTX 3060 Ti Twin Edge OC which is currently available for $770.21; however, there is some speculation that, by 2022, the price of the card could reach over $800 and go up to over 900 dollars.

What are the Reasons Behind the Graphic Cards Price Hike?

Even though visual experiences are becoming more and more important to average consumers, the price hike makes it almost impossible to afford them.

Let’s explore why graphics cards are so expensive.

Supply and demand for graphic cards:

There are the economic laws of supply and demand that determine the price of any product on the market, and this also applies to the graphic cards market, especially after the Covid when everything was put on lockdown. People have become more familiar with the gaming industry in the last few years, and the building of PCs has become a passion for the younger generation, thereby driving up the demand in this industry. If the number of GPUs requested exceeds the number of GPUs available, the prices will increase. Therefore, if manufacturers increase the production of GPUs more than the amount we are willing to buy, prices will drop.

The effect of covid 19 on Graphic Cards:

There was considerably less demand in the weeks and months before Covid erupted than there was in the months after Covid erupted. Further, Jon Peddie, a GPU market analyst, indicates that desktop purchases have declined, resulting in an increase in GPU sales over the past few years. In 2020, Nvidia and AMD would have been unable to sell their latest GPUs because COVID-19 affected manufacturing and supply chains. It is impossible to predict graphics processor demand during a pandemic and how difficult it is for the technology market to move during a crisis.

In some Asian countries, more stringent COVID-19 requirements may have contributed to the emergence of this situation. In these countries, due to pandemics and lockdowns, there has been a decrease in the production of graphics cards. There are many factors that have led to a dramatic increase in graphics card availability between May and July of 2021, but since around July 4, it has started to decline again. On a yearly basis, TGI also reported an increase of 11.2 percent in PC GPU shipments after the restrictions were relaxed over time and a surprise rise in PC GPU shipments of 2.5 percent when restrictions were relaxed over time.

Typically, once a retailer restocks their inventory, they almost immediately sell out of the merchandise. During the cryptocurrency boom, cryptocurrency miners and scalpers were using bots to purchase as many graphics cards as possible to increase their profitability. This led to a lack of stability in the market. After a required period of adjustment, it should be possible to see some improvement in supply.

What Is The Relationship Between Cryptocurrency and Graphic Cards?

Let’s start by familiarizing ourselves with the concept of cryptocurrency. It is worth noting that bitcoins are a digital currency, and as such their value fluctuates based on the economic principle of supply and demand.

In 2017-2018, Bitcoin’s market value exploded, and it is now a highly lucrative investment to mine digital currencies. It should be noted that almost all cryptocurrencies are mined and theoretically if you were to be able to trade any cryptocurrency, you would have to build a computer that could have enormous processing power and process very complex mathematical equations very quickly. Despite its relative newness, Bitcoins became extremely popular in a short amount of time as many people struggled to acquire them. There is actually a competition involved in working our way through a cryptocurrency mining site, looking for gold, and then properly extracting it. Gold in this scenario is described as a blockchain, but there is another term, especially in this scenario. The best method for newcomers in the cryptocurrency world to obtain Bitcoin is through GPU mining. From the standpoint of an average player, it would appear that a top-of-the-line graphics card is essential for beating the competition. In this way, mining rigs are typically equipped with more than one graphics card, and they’re not all running on your desktop.

The CPU can be programmed to execute four 32-bit instructions per cycle, but a GPU can be programmed to execute three thousand 32-bit instructions per cycle, based on one-hundred-and-eighty-bit instructions. GPUs are therefore inherently better at Bitcoin mining than CPUs for this very reason. With as long as you had the startup money, GPU-based mining rigs were a fairly profitable way to obtain bitcoin, as long as you had the requisite computing power. It goes without saying that the more cores a GPU has, the better it is for profitability.

Is crypto mining responsible for the increase in graphic card prices?

A considerable increase in the demand for GPUs in the last year has been attributed to cryptocurrency mining, a method of creating new tokens with the help of a computer chip. For those building or purchasing a computer in 2020 or 2021, you may have noticed an increase in price and the unavailability of new graphics cards. Many retailers, including those who operate on e-commerce platforms like Amazon and eBay, are sold out of graphics cards, and used GPUs are often several times their suggested retail price.

As a result of the cryptocurrency boom, memory used in most popular graphics cards has gotten more expensive, meanwhile, GPUs for mining have experienced a spike in demand. It was not long ago that video gamers were confronted with graphics card prices that were outrageous, the end of last year and also during the first six months of this year. As a result, the people who have been building or upgrading their PCs have encountered a number of difficulties over the last few months. Those who have a career in multimedia, or those who are serious gamers, face a problem in this regard, as most PCs these days rely heavily on their graphics cards for basic operations. There is a consequence of this, however, in that many users are forced to buy obsolete models from a decade ago or inferior integrated graphics that come with their processors, as opposed to purchasing used, refurbished components without warranties. By looking at the shortage of parts, first-time PC builders felt discouraged from building their own systems.

During the upswing of cryptocurrency prices, Nvidia reported that cryptocurrency helped to boost the company’s profits by a significant amount. It’s not surprising that gamers were outraged by the surge in prices. There are a number of examples of this, including the popular Nvidia GeForce GTX 1080 Ti graphic card, which was offered at its introductory price of $900 in January 2018. In early 2017, there was a drastic shift in the market for cryptocurrencies that resulted in the price of cryptocurrencies plummeting, and in just one day, over $6 billion was wiped off the global market. So, as a result, GPU makers have been relieved of the pressures placed on them, resulting in lower prices and allowing gamers to breathe a sigh of relief.

The GPU manufacturers themselves may find that positive news as well since players are among the most reliable and stable markets for their long-term products. With the price of the average GTX 10 series cards finally dropping to their recommended retail price of $700, the price has dropped considerably. As opposed to the previous price hike, this is a far better price drop. A key component of Nvidia’s RTX 3060 graphics cards is designed to keep cryptocurrency mining out of your computer. However, the company accidentally released drivers that enabled crypto mining, so the entire strategy was reversed.

Do manufacturers or resellers bear responsibility for Graphic cards Price increases?

The Nvidia GPU prices increased by an additional 170% from the beginning of August 2021 to the beginning of September 2021, after a long period of falling and recovering. There is no need for consumers to feel liable for inflated prices as the manufacturer wants them to understand that. Despite the fact that prices are low compared to the majority of 2021, they are still increasing, and concerns have been raised that they will climb even higher during the high-demand period of the year.

As of May 23rd, AMD prices have reached 174% of MSRP, which is higher than Nvidia’s. The factors that influence AMD GPU pricing are similar to those affecting Nvidia’s, however, there are additional factors that could aggravate the situation.

We have therefore obtained the truth from the source. The fact remains that manufacturers alter the reference designs despite disliking them, but it is widely accepted that the prices will rise when availability is reduced when we talk about competition. The manufacturers are making it clear that they have no control with respect to the outrageous prices by explicitly stating that the prices are not their fault. Afterward, the price will be determined by the retailers, and the retailers will do what they want.

How Many Retailers are responsible for Graphic Cards Price Increase?

Overpriced items are another frustrating trend. The fact remains that eBay and Amazon sellers will always sell items for hundreds of dollars over what they are worth. The two biggest GPU companies, AMD and Nvidia, recently released their latest releases. 

Because of memory shortages, Fury cards last year were rare, and AMD’s RX series cards are scarce. The GTX 1070 became nearly impossible to obtain after its release. Thus, retailers completely ignore the MSRP during launch windows when there is a limited supply.

Will GPU prices go down in 2022?

Globally, graphics cards are in short supply because of the current semiconductor crisis. Buying the best graphics cards from a retailer is difficult today, as many of the top cards are no longer available at retail stores, and those that are are severely overpriced and only available on eBay. How did it get to this point? In recent months, industry experts have been able to piece together what caused the global chip shortage, but the vast majority of people are unsure when they will be able to purchase GPUs again.

As supply continues to be stretched for the remainder of 2021 and the first half of 2022, prices may increase incrementally throughout this period as well, with the GPU market finally returning to normalcy by the end of 2022. Manufacturers around the world will be catching up with shortages within the near future, crypto miners may reduce their output so they don’t clog up the GPU market, and NVIDIA’s partners may change.

Conclusion

This is potentially good news from the gaming community and PC enthusiasts, worried about future price increase since Ethereum will switch to a proof-of-stake model next year. As soon as the switch will take place, mining Eth will virtually cease to be a demand for GPUs. 

However, there is still a possibility of a delay or uncertainty, but there are alternative cryptocurrencies that are still best mined using GPUs eventually I believe it will all be worth it. This issue of price increasing day by day has led to dissatisfaction among consumers and prospects. In contrast to GPUs used for gaming or general work, GPUs designed specifically for mining reach their maximum processing power when used for mining only. Eventually, these types of solutions could have an effect on prices in the future.

The manufacturers have hinted towards the possibility of reintroducing a graphics card that is specifically designed for mining and keeping it separate from its other consumer GPU products. Here again, resellers affect marketplaces in a way that newbies don’t even know what they are going to buy and is expensive. Therefore, they do not have much value on the used market in terms of resale compared to new ones..

Waqas Siraj
He is a student of IT; he loves blogging and traveling.