Monday, August 2nd 2021
Sudden Drop in Cryptocurrency Prices Hurts Graphics DRAM Market in 3Q21, Says TrendForce
The stay-at-home economy remains robust due to the ongoing COVID-19 pandemic, so the sales of gaming products such as game consoles and the demand for related components are being kept at a decent level, according to TrendForce's latest investigations. However, the values of cryptocurrencies have plummeted in the past two months because of active interventions from many governments, with the graphics DRAM market entering into a bearish turn in 3Q21 as a result. While graphics DRAM prices in the spot market will likely show the most severe fluctuations, contract prices of graphics DRAM are expected to increase by 10-15% QoQ in 3Q21 since DRAM suppliers still prioritize the production of server DRAM over other product categories, and the vast majority of graphics DRAM supply is still cornered by major purchasers.
It should be pointed out that, given the highly volatile nature of the graphics DRAM market, it is relatively normal for graphics DRAM prices to reverse course or undergo a more drastic fluctuation compared with other mainstream DRAM products. As such, should the cryptocurrency market remain bearish, and manufacturers of smartphones or PCs reduce their upcoming production volumes in light of the ongoing pandemic and component supply issues, graphics DRAM prices are unlikely to experience further increase in 4Q21. Instead, TrendForce expects prices in 4Q21 to largely hold flat compared to the third quarter.Sudden drop in ETH prices led to plummeting GDDR5 and GDDR6 spot prices
Recent observations on the spot trading of graphics DRAM products indicate that the changes in this market closely correlate to the changes in the value of ether (ETH) because graphics cards are the crucial tool for processing the mining algorithm of this cryptocurrency. ETH prices fell by more than 50% within a two-month span as a result of the latest measures enacted by regulatory agencies around the world to suppress the speculation of cryptocurrencies. Accordingly, cryptocurrency miners' and investors' interest in ETH has also diminished significantly. The plunging demand from cryptocurrency miners also means that a substantial number of graphics cards are being pushed into the second-hand market. TrendForce's investigation shows that spot prices of graphics cards have fallen by about 20-60% over the past month or more. The differences in the magnitude of decline depends on brand and technology generation. Furthermore, the across-the-board decline in spot prices of graphics cards has also severely constrained the spot demand for graphics DRAM.
According to TrendForce's understanding, even though spot prices are still higher than contract prices for GDDR6 chips, the difference is rapidly shrinking. This, in turn, will have an adverse effect on the general price trend of GDDR6 chips in the future. The trading is even more subdued for GDDR5 chips that are used in the earlier generations of graphics cards. Spot prices are now actually about 20% lower than contract prices for GDDR5 chips. The difference here indicates that there is a glut of older graphics cards, and the GDDR5 chips that are embedded in them are no longer in high demand.
Contract prices of graphics DRAM are expected to increase by nearly 15% for 3Q21 as graphics DRAM suppliers' fulfillment rate remains relatively low
Regarding the contract market for graphics DRAM, the sell-side has considerable leverage in price negotiations as these suppliers prioritize the production of server DRAM ahead of other product categories. In the current ecosystem of discrete graphics cards, graphics DRAM buyers such as Nvidia are still opting for a business model based on bundle sales (that is, graphics card manufacturers that purchase Nvidia GPUs must also purchase graphics DRAM from Nvidia). Given that Nvidia and AMD have cornered the vast majority of graphics DRAM supply, notebook OEMs and small- and medium-sized manufacturers of computer components (such as motherboards) will find it difficult to procure sufficient graphics DRAM, while DRAM suppliers' fulfillment rate for graphics DRAM chips remains relatively low. These aforementioned factors are responsible for not only the nearly 15% QoQ hike in the overall contract prices of graphics DRAM for 3Q21 (which is slightly higher than the corresponding price hikes in mainstream PC and server DRAM products for 3Q21), but also why spot prices of GDDR6 chips are about 10-15% higher than contract prices.
On the whole, prices in the graphics DRAM spot market, which is an extremely responsive market, have already begun to reflect the weakening demand from the end-product segment, particularly for graphics cards used in cryptocurrency mining. As the supply of second-hand graphics card increases, some graphics card manufacturers may thus kick off promotional price cuts to boost sales. In addition, buyers in the spot market may also begin anticipating even lower prices, and this anticipation will likely either lead to a massive decline in their graphics card demand or result in these buyers adopting a speculative attitude regarding graphics DRAM. TrendForce therefore believes that the gap between spot prices and contract prices of GDDR6 chips will begin to narrow in 3Q21.
It should be pointed out that, given the highly volatile nature of the graphics DRAM market, it is relatively normal for graphics DRAM prices to reverse course or undergo a more drastic fluctuation compared with other mainstream DRAM products. As such, should the cryptocurrency market remain bearish, and manufacturers of smartphones or PCs reduce their upcoming production volumes in light of the ongoing pandemic and component supply issues, graphics DRAM prices are unlikely to experience further increase in 4Q21. Instead, TrendForce expects prices in 4Q21 to largely hold flat compared to the third quarter.Sudden drop in ETH prices led to plummeting GDDR5 and GDDR6 spot prices
Recent observations on the spot trading of graphics DRAM products indicate that the changes in this market closely correlate to the changes in the value of ether (ETH) because graphics cards are the crucial tool for processing the mining algorithm of this cryptocurrency. ETH prices fell by more than 50% within a two-month span as a result of the latest measures enacted by regulatory agencies around the world to suppress the speculation of cryptocurrencies. Accordingly, cryptocurrency miners' and investors' interest in ETH has also diminished significantly. The plunging demand from cryptocurrency miners also means that a substantial number of graphics cards are being pushed into the second-hand market. TrendForce's investigation shows that spot prices of graphics cards have fallen by about 20-60% over the past month or more. The differences in the magnitude of decline depends on brand and technology generation. Furthermore, the across-the-board decline in spot prices of graphics cards has also severely constrained the spot demand for graphics DRAM.
According to TrendForce's understanding, even though spot prices are still higher than contract prices for GDDR6 chips, the difference is rapidly shrinking. This, in turn, will have an adverse effect on the general price trend of GDDR6 chips in the future. The trading is even more subdued for GDDR5 chips that are used in the earlier generations of graphics cards. Spot prices are now actually about 20% lower than contract prices for GDDR5 chips. The difference here indicates that there is a glut of older graphics cards, and the GDDR5 chips that are embedded in them are no longer in high demand.
Contract prices of graphics DRAM are expected to increase by nearly 15% for 3Q21 as graphics DRAM suppliers' fulfillment rate remains relatively low
Regarding the contract market for graphics DRAM, the sell-side has considerable leverage in price negotiations as these suppliers prioritize the production of server DRAM ahead of other product categories. In the current ecosystem of discrete graphics cards, graphics DRAM buyers such as Nvidia are still opting for a business model based on bundle sales (that is, graphics card manufacturers that purchase Nvidia GPUs must also purchase graphics DRAM from Nvidia). Given that Nvidia and AMD have cornered the vast majority of graphics DRAM supply, notebook OEMs and small- and medium-sized manufacturers of computer components (such as motherboards) will find it difficult to procure sufficient graphics DRAM, while DRAM suppliers' fulfillment rate for graphics DRAM chips remains relatively low. These aforementioned factors are responsible for not only the nearly 15% QoQ hike in the overall contract prices of graphics DRAM for 3Q21 (which is slightly higher than the corresponding price hikes in mainstream PC and server DRAM products for 3Q21), but also why spot prices of GDDR6 chips are about 10-15% higher than contract prices.
On the whole, prices in the graphics DRAM spot market, which is an extremely responsive market, have already begun to reflect the weakening demand from the end-product segment, particularly for graphics cards used in cryptocurrency mining. As the supply of second-hand graphics card increases, some graphics card manufacturers may thus kick off promotional price cuts to boost sales. In addition, buyers in the spot market may also begin anticipating even lower prices, and this anticipation will likely either lead to a massive decline in their graphics card demand or result in these buyers adopting a speculative attitude regarding graphics DRAM. TrendForce therefore believes that the gap between spot prices and contract prices of GDDR6 chips will begin to narrow in 3Q21.
38 Comments on Sudden Drop in Cryptocurrency Prices Hurts Graphics DRAM Market in 3Q21, Says TrendForce
I'm mining because I had access to cards through SI channels at reasonable prices, I could see a healthy profit in it, and my central heating reclaims waste heat via an air-source heatpump so it's not even "wasted" energy. I'll probably dump my cards on Ebay when it moves to PoS unless something else is profitable; Ravencoin is looking promising but if I'm not making enough per day it's just easier to sell the rigs and reclaim some of the capital cost (ETH mining since late April and had recouped all hardware costs within 3 months).
The good news is that it probably takes 5-6 months to break-even on hardware purchases with current mining profits, so almost none of the miners are going to be buying cards anymore - which should ease supply and reduce scalpers. Come Eth 2.0, we should see a ton of Ampere cards dumped on ebay and responsible miners will hopefully post pictures of the rigs they were in, state that they were mining cards, and demonstrate that they were cooled and handled properly. I'd 100% buy an ex-mining 3070/3080 as long as I could tell that the miner treated card longevity and good cooling as a priority when it was mining ( and most of the multi-GPU rig owners I talk to on Ethermine Discord do indeed prioritise cooling and protecting the investment in their GPUs).
You should be happy it's going PoS anyways. It's a good thing for everyone.
I'm happy eth is going pos and that is indeed a step in the right direction, I'm an avid trader that have been very positive about it but like I said before it will take few years yet, thieves are spreading fake news that eth pos is coming in few months and I know that is not real or possible because I have been there since the very beginning.
Meh, believe whatever We both will know by years end.
And of course I could be wrong too. That's basically a given with this stuff.
I have a feeling the age of lizards gonna be back :shadedshu:
ETH dev team wants PoS to happen by Dec 4th
ETH dev team has a near 0% track record of doing things on time.
The reality is that PoS is coming, and Dec 4th is the earliest possible time that it could even happen, but empirical data says it will probably be delayed. Whether it's delayed by weeks or by years is anyone's guess but the only certainty with cryptocurrency is that it's unpredictable.
I'll be mining to the bitter end, or until it becomes unprofitable - whichever comes first.
At the moment I get a little over $60 a day profit for doing absolutely nothing so of course I'm going to keep milking this cow.