In recent years, the cost of GPUs has increased dramatically. Though this trend has resulted in some benefits for GPU manufacturers and suppliers, it’s also made life more difficult for users looking to purchase new graphics cards. But you might be wondering: What exactly does “scalping” mean? And how does it affect gamers and miners alike?
Users have become increasingly frustrated with the rising cost of GPUs
GPUs are used in various applications, including cryptocurrency mining and gaming. They’re also utilized for machine learning, artificial intelligence (AI), scientific research, and more.
GPUs have become increasingly important to modern society over the past decade. As a result, users have become increasingly frustrated with the rising cost of GPUs and other components. Part of that price increase is due to crypto mining.
As technology has advanced, however, more applications for GPUs have been developed
As technology has advanced, however, more applications for GPUs have been developed. What was once only used for gaming and basic video editing is now being utilized in AI, deep learning, and other applications.
GPUs are also used for cryptocurrency mining. Miners need to perform complex mathematical equations verifying transactions on a blockchain to receive cryptocurrency rewards. A high-powered graphics card can run these algorithms faster than processors. However, they are not as efficient as ASICs.
Finally, GPUs are also used heavily in 3D rendering as they can process millions of polygons per second.
One of the areas that has made the biggest impact for GPU use is cryptocurrency mining
One area that has made the most significant impact for GPU use is cryptocurrency mining. As you may know, cryptocurrencies rely on a network of computers contributing processing power to ensure transactions are secure and verifiable. The more processing power you have, the bigger rewards you can earn. For this reason, it’s essential to have modern hardware with many cores or high clock speeds.
Due to their parallel nature, GPUs are much better suited for this type of work than CPUs. They can perform multiple tasks simultaneously without slowing down due to heat buildup or power consumption issues. In addition, it makes them ideal for mining crypto coins because they can be overclocked and still be stable enough for long-term usage with minimal maintenance costs.
The cryptocurrency market created higher demand for an already limited product
Cryptocurrency mining is a very energy-intensive process. So much so that it has created a new demand for graphics cards. To mine crypto coins, you need to use specialized software to solve complex mathematical equations. That can take up much computing power and generate new coins as a reward.
Crypto mining has increased prices and reduced availability of graphics cards across the board. However, it isn’t just happening in the cryptocurrency market; other previously unaffected products now feel its effects.
This increase in demand has resulted in excesses that are generally undesirable for consumers
GPU scalping is an example of market inefficiency. It occurs when there is an increase in demand for a product, but supply does not increase at the same rate.
The increase in demand causes prices to rise and creates an undesirable excess for consumers, who are then forced to wait longer or pay higher prices than they may have been willing to do.
In this case, this increase in demand has resulted in excesses that are generally undesirable for consumers:
- Higher prices: Because more people are trying to buy hardware than there are GPUs available on the marketplace, sellers can charge whatever they want. That can cause some devices’ pricing structures to become irrelevant. Instead of buying them at MSRP from a retailer like Amazon or Newegg, you might pay twice as much or more. Third-party sellers on eBay or Craigslist likely purchased multiple graphics cards to resell them at inflated prices.
- Longer wait times: It can take weeks or even months to receive your new GPU. Orders are often filled on a first-come, first-serve basis. Those performing GPU scalping often buy up most of the available supply immediately.
Scalping and bots remain a pressing problem
For example, scalping and bots can increase prices, reduced availability, and longer wait times for fans to get their hands on the GPUs they want. For example:
- The price of GPUs has skyrocketed since the beginning of 2018.
- Gamers who had been pre-ordering new graphics cards for months have reported that stores canceled their orders. That is mainly due to GPU scalping participants offering higher prices.
- Some companies are taking measures to discourage these practices. They limit the number of graphics cards available through their website. That limitation can still be circumvented, though.
Scalpers are people who buy an item with the sole intent of reselling it at a higher price somewhere else
Scalpers are people who buy an item with the sole intent of reselling it at a higher price elsewhere. In some places, scalping is illegal. In others, it isn’t.
Scalping itself isn’t necessarily bad. For example, a company might sell tickets to an event and then resell them for more money at face value (or less) on resale sites to profit from the event’s popularity. But it’s also possible for people to illegally buy up tickets in bulk and profit from big events where demand far exceeds supply.
The bottom line is that GPU scalping is likely here to stay. Scalpers can make their money by manipulating the market and exploiting scarcity.
But as more people become aware of these practices, we hope they will be avoided in favor of more honest means.