Digging for Gold – the great graphics card shortage

With cryptocurrency mining on the rise, graphic card supply is being drained out of the Channel. Jonathan
Easton takes a look at just what’s going on and discovers that this might be the new state of affairs

We’re very used to seeing stock shortages in the Channel. Whether it’s due to an unexpected excess of demand (see Nintendo’s contentious rollout of the Classic Mini NES last year) or a dearth of supply (such as in the ongoing situation surrounding RAM), hearing that the latest product or class is in short supply is nothing new. 

The latest to fall foul of stock scarcity however is something we weren’t entirely expecting to see: graphics cards. This isn’t anything to do with production struggles; they’re being made and they’re being bought – just not by the usual suspects.

“It’s 100 per cent down to mining demand,” asserts Centerprise MD Jon Atherton. “As cryptocurrency rates continue to rise, more people are jumping onto GPU and farms to mine currency.”

Suffice to say then that the normal market for high-end graphics cards – power users, gamers, overclockers – aren’t getting a look in. And that may be par for the course going forward notes GNR Technology managing director Dave Stevinson: “PC gamers and enthusiasts potentially will no longer be the largest consumer of high-end VGA cards.”

But it’s not just any card that the miners are after, Chillblast sales director Ben Miles points out. “The shortages start at the cards that deliver the best bang for buck, then move onto the one that delivers second best value and so on, along the cost versus compute bell curve. Right now the worst affected cards are AMD Radeon RX 580, 480, 470 and 570. Nvidia cards are now also extremely effected with the 1060, 1070 and even 1050Ti in severe constraint. As these cards dry up, pressure starts to be put upon cards above and below the ‘ideal’ SKUs in the product stack.”

And while a new type of buyer is emerging as the key demanding force in the market, different countries are also starting to show an interest in mining. 

“The shortages are caused by the massive surge in demand – particularly from Russia and Asia,” says Miles. This is a belief reflected by others as well, with Atherton identifying ‘China, Russia and Australia’ as the main areas commanding stock.

As a result of all this, we have seen both AMD and Nvidia starting to produce cards that are specifically designed for mining. But it’s unclear at this point whether that will do anything to alleviate the strain or free up stock for general consumers. 

“It will all depend on how companies position the pricing and what hashrates the cards produce,” posits Jonpaul Warren, business development manager for Technology Solutions at Beta Distribution. “I’ve also seen a few issues on forums with these cards only offering a three-month warranty, but in reality if general cards are found to have been used for mining the warranty won’t be honoured anyway.”

It’s also worth noting that while GPUs are grabbing the headlines, they aren’t the only component type being oversubscribed to. In order to mine currency – which is a time consuming and power-draining exercise – high-power PSUs are also in demand. “Anything over 1000w is short in the Channel,” says Target Components’ Cory Lees. 

“We have seen high-end, high-wattage power supplies go into shortage with the likes of Seasonic power supplies seen as a premium,” Warren adds.

Ultimately though it’s not really up to the vendors to figure out where the stock is going. If they’re selling a product and someone’s buying it then they are doing their job. But even if a vendor decides to take action, there’s not actually a whole lot it can do says Miles. “Vendors are very limited in how they can control the Channel. Restricting sales to ‘one per customer’ only works when selling direct to consumers. Once out in the field, resellers are at liberty to sell to the highest bidder however they like.”

So what can the Channel do to make sure to limit the effect of this surge of demand from the East? It’s all about communication and commitment, concludes Miles. “System integrators and resellers need to make sure their relationships with key VGA vendors are strong and resilliant enough to ensure disproportionate stock allocation at times of constraint by showing loyalty in times of plenty.” 

What’s a cryptocurrency?

Pioneered by the darker corners of the web, cryptocurrencies are alternative, decentralised currencies that aren’t bound to one particular country’s economy. 

Using cryptography (the process of making something secure from end-to-end through protocols to block out third parties), cryptocurrencies such as Bitcoin and Ethereum utilise a blockchain – a sort of public ledger – to record transactions and ensure that they are securely made. 

They have seen a massive boom over the past few years as people have started to see them as a serious alternative to physical currencies. What might have been pennies a few years ago now amounts to serious money.

One example a few years ago saw Lily Allen turn down ‘hundreds of thousands’ of bitcoins to play a gig in then-popular MMO Second Life. What was only a few hundred pounds at the time would now amount to hundreds of millions with the cryptocurrency having just crossed over the £2,000 mark for one coin. What a missed opportunity!

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