After years of a GPU supply crunch, it looks like we’re returning to normalcy. GPUs are Graphical Processing Units, a computer park primarily used in computers for simulations, gaming, artificial intelligence, and in cryptocurrency for Proof of Work mining, though a small amount of currencies like Chia have gotten creative with alternative mining mechanisms.
Why Do We Have Too Many GPUs Now?
The real reason for the resurgence in GPU supply is a drop in GPU demand. Until fairly recently, crypto mining was a profitable business. With the big decline in crypto prices, it’s no longer profitable for most people to mine cryptocurrencies, and with the imminent move of Ethereum from Proof of Work to Proof of Stake, all of these Ethereum miners will have to find something else to do with their GPUs.
Ethereum is one of the most profitable tokens to mine right now, so with that option going away, there will be a lot of miners losing returns. There is another meaningful impact here: gamers. With the tightening economy, many people simply aren’t buying new computers or gaming systems.
Likely some of these changes are coming from a recovering global supply chain as the impact of covid around most of the world diminishes.
Sizing the GPU Surplus
There are a few ways to measure the decrease in GPU demand, and most of them are pointing in the same direction. Nvidia, the largest player in the GPU market and really the company that defines the industry, is reportedly taking 40-50% fewer GPU’s from their Taiwanese manufacturer TSMC over the course of 2022.
Intel is expecting to make $8B-$11B less revenue this year, and is expecting a 10% drop in PC sales. Nvidia originally gave guidance towards $8.1B this quarter, they instead reported $6.7B this past week. Nvidia and AMD GPUs are selling for a whopping 30-50% discount from their peak.