KEY POINTS

  • Ethereum nears its shift to Proof-of-Stake
  • When this happens, it won't need Ethereum miners
  • Ethereum was trading up 4.79% at $3,004.10

The heyday of Graphics Processing Units (GPU), which are widely used for mining cryptocurrencies, is nearing its end as demand weakens and prices start to fall, with Ethereum approaching its goal of migrating to a proof-of-stake (PoS) model.

The price of popular GPU models available on eBay has slumped 37% since May last year after China started the crackdown on crypto mining in the country. Since then, the rate of the price drop has accelerated, which could be attributed to a weaker demand as Ethereum's migration to Proof-of-Stake approaches.

For context, GPUs are deemed necessary hardware in cryptocurrency mining on the Proof-of-Work consensus mechanism used by crypto miners to mine crypto assets like Bitcoin. In this setup, a decentralized network of computers validates transactions.

Hackers linked to North Korea are responsible for the March 2022 theft of $620 million in ethereum, a type of cryptocurrency
Hackers linked to North Korea are responsible for the March 2022 theft of $620 million in ethereum, a type of cryptocurrency AFP / INA FASSBENDER

Ethereum's imminent switch to the proof-of-stake system, called The Merge, will make the GPU redundant since in the new system, users will be able to validate transactions and create new blocks by staking or locking up Ether.

Prices of major GPU models in the industry have been on a free fall this year— starting at 7.4% in January, 9.5% in February and 12% in March. An Easter weekend roundup conducted by 3D Center Germany reported that AMD GPU prices fell by 13% on average while Nvidia GPUs slumped by 6%.

Susquehanna analyst Christopher Rolland earlier noted that the mark up over manufacturer suggested retail price (MSRP) has dropped to 41% from 77%. In addition to this, a report this month from Tom's Hardware revealed that the pricing for Nvidia RTX and Radeon RX GPUs is down month to month.

The report claimed, many of these GPUs have their prices down by over 10%. Apart from this, the site disclosed that multiple retailers are carrying inventory for days without selling out, something that was unheard of in 2020 and 2021.

Earlier this month, Ethereum Foundation developer Tim Beiko said the The Merge might not happen soon. "It won't be June, but likely in a few months after. No firm date yet, but we're definitely in the final chapter of PoW on Ethereum," he tweeted.

Ethereum was trading up 4.79% at $3,004.10, with a 24-hour volume of $21,073,561,478, as of 12:46 a.m. ET on Tuesday, based on the data from CoinMarketCap.

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