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Cryptocurrency markets collapse to their lowest levels in years, but it's not all good news for gamers

PC Gamer logo PC Gamer 14/06/2022 Chris Szewczyk
Small GPU mining setup with pensive miner © Provided by PC Gamer Small GPU mining setup with pensive miner

The last few days have seen a cryptocurrency bloodbath, and the declines may not be over. Put simply, the world economy is going to hell, and crypto is coming with it.

There are a combination of factors behind the precipitous drop. Wider economic issues are certainly a major factor. Rising inflation and the rapid raising of interest rates to combat it are adding major cost of living pressures. Wages aren’t rising enough to offset it, meaning people have less purchasing power. Flow on effects including rising energy prices and falling asset value are creating conditions that are ripe for a major economic downturn.

Then there's the war in Ukraine. It's becoming a hard slog with no real prospect of a quick ending. Russian blockades mean Ukraine cannot export its food supplies—particularly grain—which is leading to spikes in food prices and could lead to famine in many areas that are suffering from food shortages anyway.

Crypto faces its own problems on top of these wider economic issues. There’s the recent collapse of the Terra Luna ecosystem which pummelled markets, but that’s not all. On Monday the DeFi platform Celsius announced an operational halt, putting billions of dollars' worth of assets at risk.

As the value of the underlying assets tumbles, so does the risk of more crypto project failures. Negativity continues to swirl around the stablecoin, Tether, mostly due to a lack of transparency over its reserves. If it were to lose its USD peg, then it will make the recent Terra Luna collapse look like someone losing a buck in a vending machine. 

Well, not quite, but you get the idea. 

Tether is the third largest coin by market cap and it is vital that it maintains its 1:1 USD peg.

From its high of nearly $70,000 in November last year, to a low of just over $22,000 at the time of writing, Bitcoin is teetering. All of the other cryptos, including Ethereum, follow the lead of Bitcoin. It's important that Bitcoin keeps its head above the key psychological $20,000 level. If that breaks then who knows where it will end up.

Where does this leave Ethereum? In much the same precarious position as Bitcoin. Ethereum's all time high was above $4,800 in November 2021, whereas it's sitting on $1,200 at the time of writing; that's a 75% decline. Those Wall Street guys who panic over a 5% drop should play the crypto markets to see how it really feels to be rekt.

Will the drops have any effect on graphics card prices? It's obvious that the lower the price of Ethereum goes, the less lucrative it is to mine, especially when faced with rising energy costs. Casual and industrial scale miners alike are much more likely to sell off their GPUs in order to recoup costs. It means that purchases of new mining hardware are much less likely.

Will this lead to a glut of second-hand RTX 30 and RX 6000 series cards? It's definitely possible. Efforts to ramp up production have a lag effect. As component shortages ease, bottlenecks are removed and the number of cards available will increase. 

That means it's good for gamers! But, gamers face the same economic headwinds as everyone else, and a discretionary purchase is not as important as paying for gas to get to work, or higher rent, or higher mortgage repayments. An excess of supply combined with lower demand from gamers and miners means that GPU prices could have some way to fall.

There’s another thing to consider. Will excess stocks of current generation cards lead Nvidia or AMD to delay the introduction of next gen cards? If there is a genuine oversupply, the answer to that would be yes. GPU makers won’t want unsold stock taking up space in warehouses that no one wants to buy. When you add to that some recent rumors that the RTX 40 series still has a lot of development work to be completed, the signs point towards a launch closer to the end of the year.

Crypto still feels like the wild west at times. How low can it go? Take care out there, this rollercoaster has a few twists and turns to go yet.


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