Ethereum Merge is Taking a Toll on Chip Prices! Already making an Impact

Ethereum merge has an impact on the chip prices even before it begins.

Bitcoin (BTC) waffled around the $20,000 mark for the ninth straight day, with traditional markets mostly closed in the U.S. in observance of Labor Day. At the time of writing, the largest cryptocurrency was changing hands around $19,800, down 0.7% over the past 24 hours. Ether (ETH), the second-largest cryptocurrency, was up 1.7% to $1,598.

Binance, the world's largest crypto exchange, said it would move to stop supporting the stablecoins USDC, USDP, and TUSD, with a plan to automatically convert users' holdings of those coins into its own stablecoin, BUSD, on Sept. 29. Poolin, one of the largest bitcoin mining pools, suspended withdrawals as part of an effort to preserve assets and stabilize liquidity.

A Brazilian financial regulator barred the Singapore-based crypto exchange Bybit from brokering securities.

As cryptocurrency entered the mainstream, the price of graphics processing units (GPUs) for personal computers was often tied to the fate of the crypto market, since they became popular for cryptocurrency mining. Now, with an end to Ethererum proof-of-work mining on the horizon, thanks to the upcoming Merge and its shift to a proof-of-stake blockchain system, prices for GPUs are dropping like a rock. A bull market for crypto has, in the recent past, come with a bull market for GPU prices. At the height of ether's 2021 rally, some of the most powerful GPUs were retailing for an average of 114% over their manufacturer's suggested retail price (MSRP). After all, for proof of work-based protocols, what Ethereum is currently doing since its launch in 2015 GPUs and their parallel processing ability has been essential for mining.

Ethereum's shift away from computationally intensive proof-of-work to proof-of-stake means that the tens of millions of GPUs purchased over the last four years to mine ether no longer have a use. Some miners are considering moving their operations to Ethereum Classic, but despite the protocol being around for nearly six years, it just hasn't garnered the network effect needed to allure a critical mass of decentralized apps, NFTs, or DeFi. GPU prices are reflecting this. According to published data from industry analyst house Jon Peddie, overall GPU unit shipments decreased by 15% from last quarter. Part of this comes from a softening PC market, with analysts at IDC forecasting a 12.8% decline year-over-year for 2022. The rapid quarter-over-quarter drop in GPU prices puts the blame squarely on evaporating demand from crypto miners.

According to GPUTracker.eu, prices for some of the most popular GPUs are down double-digits. The RTX 3080 Ti, a once-favorite for miners, has seen its average selling price drop by 45% in the last quarter, putting it almost at MSRP. In February, the card was being sold for around $2,000; now it's just over $1,100.