Miners, GDDR Demand & PUBG Gamers

We're hardly two weeks into 2018 and it's been a wild ride for the tech industry already (CES notwithstanding). Just as we thought graphics card pricing was starting to settle down late last year, it has skyrocketed higher than ever as a result of increasing demand from cryptocurrency miners and Chinese gamers, in addition to equally inflated memory prices. Altogether, this scenario has provided the perfect storm of reasons for holding off on your next GPU upgrade.

The surging profitability of cryptocurrencies is likely the biggest contributing factor to the sudden hike in GPU pricing. The price of Ethereum has skyrocketed from ~$450 to well over $1,000 in the last month. At the time of writing, the value had hit just over $1,200, or a 170% increase in about a month and a half, so it's no wonder miners are snapping up every last GPU they can get.

Ethereum is just one example, but there are other "up and coming" cryptocurrencies that have miners excited. So, while we hoped for cryptocurrency mining to start cooling off in 2018, so far the opposite has occurred.

As discussed in Part 1 about DDR4 memory, which has been also been driven up in cost due to a lack of supply during a time of high demand -- or price fixing (?) -- the same is happening with GDDR5 memory and it's expected that this RAM shortage will increase the cost of mid-range graphics cards such as the GTX 1060 and RX 580 by anywhere from $5 to $20.

That by itself isn't a significant factor but lump it in with the other issues and it just adds to the cost. I'd say $5 to $20 assumes normal market conditions and the final hike could be amplified by relentless demand from miners, causing further supply issues.

Many gamers seem to be pointing the finger at Nvidia, claiming price gouging or other underhanded tactics. I don't believe this is true. As was the case for much of last year, this also impacts the price of AMD graphics cards, it just so happens that there is a higher demand for Nvidia GPUs right now.

A possible explanation for this could be Chinese games rushing into the ever popular PlayerUnknown's Battlegrounds. We recently spent a lot of time benchmarking the game, with a comprehensive look at performance of both CPUs and GPUs. Because the game is built on the Unreal Engine 4, which was designed in collaboration with Nvidia at a time when Intel CPUs ruled, it's not too fond of AMD graphics or Ryzen.

China has gone nuts over PUBG and as a result the a big share of Steam users now appear to be from that country, accounting for 64% percent of Steam Hardware Survey respondents, compared to a mere 8.6% a year prior. Of those Chinese gamers, it's estimated that almost 80% of them own PlayerUnknown's Battlegrounds and spend a considerable amount of time playing it.

This helps explain why the GTX 1060 series has shot up to the number one position for the most widely used graphics card, almost 15% of all Steam games now rock a 1060. The GTX 750 Ti came in second, the GTX 960 is third and the 1050 Ti missed out on a podium stop by a few percent. Shockingly, the top 13 GPUs are all Nvidia-based and they make up 71% of Steam's userbase.

So as stated earlier, this looks to have created the perfect storm, smashing GPU pricing and availability. It's a lousy time to be buying PC hardware if you're a gamer and pricing is just part of the problem -- a very big problem, granted -- but simply getting your hands on a graphics card at any price can be a real challenge.

Here is a breakdown of current graphics card prices and a look back at pricing back in November and April 2017. Do note these are average asking prices, not the best or worse rates, but rather what we deem to have been the typical asking price at the time based on data from various online retailers in the US.

  MSRP April 2017 Nov 2017 Current (1/15/18)
GeForce GTX 1050 Ti $140 $150 $160 $190
GeForce GTX 1060 3GB $200 $220 $235 $410
GeForce GTX 1060 6GB $250 $280 $310 $530
GeForce GTX 1070 $380 $420 $470 $890
GeForce GTX 1080 $500 $560 $590 $940
GeForce GTX 1080 Ti $700 $755 $740 $1200
Radeon RX 560 $100 N/A $130 $140
Radeon RX 570 $170 $190 $250 $540
Radeon RX 580 8GB $230 $260 $310 $660
Radeon RX Vega 56 $400 N/A $450 $670**
Radeon RX Vega 64 $500 N/A $505 $800**

It's clear things have gotten out of hand. Availability and pricing of AMD's Radeon RX Vega line up has been sketchy since its release last August, and although things calmed down briefly in November, prices have since exploded and it's rarely possible to even buy one.

Meanwhile, the RX 500 series is available at most outlets, but prices have skyrocketed. The RX 580 isn't far off costing three times its MSRP, which is insane. The RX 570 is likewise going for more than triple its MSRP, though we only see a slight increase for the less desirable RX 560.

It's the same situation with the green team, so don't expect to get a GeForce graphics card for anywhere near a reasonable price. The GTX 1060 6GB which should sell for $250 is going for over $500 and the 1070 is just as bad. This is the worst situation involving GPU pricing I ever recall seeing.

Now, prices can't stay this inflated forever, but there's no telling when they'll return to normal or even start heading back down towards their MSRPs. Memory pricing will likely remain an issue throughout 2018. so you can expect to pay some kind of premium. The demand from Chinese gamers should start to cool off soon and that just leaves us with every builder's best friend: cryptocurrency miners. I'd expect that mining will continue to see hot runs throughout 2018 so that will likely make buying a new graphics card tricky.

On a final note, I often read comments from gamers who are angry with either AMD or Nvidia, blaming them for creating the shortages in order to price gouge and go on to claim that they could simply increase production to offset the rise in demand. Sadly, that is not the situation.

Neither AMD nor Nvidia own the semiconductor manufacturing fabrication plants that produce their GPUs and they primarily outsource that to TSMC, otherwise known as the Taiwanese Semiconductor Manufacturing Company. AMD also uses GlobalFoundries, but the point is that neither GPU maker owns these plants.

When supply runs short like we're currently seeing, there isn't much that can be done in the short term to solve this. If the plants are running at or near 100% capacity, you can't just magically ramp up without a massive investment, and I mean massive. Even if you make that investment it's years before it will even be realized.

Fabs require many expensive devices to function. Estimates put the cost of building a new fab at $1+ billion dollars, while estimates as high as $3 - 4 billion aren't uncommon. Point in fact, TSMC recently invested $9.3 billion toward its Fab15 300mm wafer manufacturing facility in Taiwan. TSMC has also estimated that future fabs might cost in the vicinity of $20 billion.

So it's not feasible or realistic to invest that kind of money to try and address what's likely a temporary demand increase, at least in the grand scheme of things. As was the situation when investigating DDR4 pricing, this means the situation won't improve until demand drops off.

When that will happen is anyone's guess, but right now building a new gaming rig is going to be significantly more costly than it ought to be. So much so that we recommend you hold off it possible. Stay tuned for Part 3!

TechSpot Series:
Why Building a Gaming PC Right Now Is a Bad Idea

2017 was an exciting year for PC hardware but it wasn't all roses. The warning signs we saw are painting more difficult in 2018. In this 3-part series we discuss why building a new gaming PC is not a great idea at the moment, or at the very least, it's going to come at great expense.