New data released by global trading and technology firm Susquehanna has revealed that the profit per month earned for mining Ethereum using a GPU mining rig has fallen as far as zero in November, down from about $150 in summer 2017.
The data indicates that in addition to the dominance of more efficient ASIC miners which dominate the Proof-of-Work mining market, GPU mining of ethereum and other cryptocurrencies is suffering from the prolonged crypto market downturn.
Impact of Downturn
In August, CCN reported that Nvidia wound up its cryptocurrency arm amidst concerns about severely diminished profitability of manufacturing GPU mining equipment in a market almost completely dominated by ASIC miners such as the Antminer series made by Bitmain. The situation continues to persist as Susquehanna semiconductor analyst Christopher Rolland quoted in a CNBC report recently stated that the company’s crypto-related revenue will remain “close to zero” in Q3 2018.
Previously, ethereum mining as an auxiliary source of income using GPU mining kits could net investors up to $150 per month per mining kit. Having relatively low barriers to entry, this earned it favour with small scale entrepreneurs and crypto enthusiasts who set up small scale mining operations in everyday spaces to capitalise on the crypto boom.
According to Susquehanna however, this situation has changed completely, with GPU mining profitability falling to zero in November 2018.
In a note to clients on Tuesday, Susquehanna noted that the situation was caused by a unique combination of risk factors including the general crypto market downturn which has seen ethereum’s price fall 70 percent from its December all time high, and the declining competitiveness of GPU miners in the face of enhanced efficiency of ASIC miners.
Nvidia Takes a Pounding
Perhaps no market player has felt the pain of GPU mining’s declining profitability more than Nvidia, which saw its GPU manufacturing business receive an unprecedented boost with ethereum’s bull run last year. At the time, the company’s share price surged strongly on heightened demand for cryptocurrency mining equipment as investors scrambled to get a piece of the bitcoin mining pie.
Ever since the start of the bear market, however, several mining pools have left the market due to its diminished profitability and the miners left are increasingly looking to squeeze out as much efficiency as possible out of their mining rigs as small margins can often be the difference between staying profitable or going into the red from month to month. Against this backdrop, ASIC giant Bitmain has gobbled up even more of the mining market with its Antminer series, leaving GPU miners – significantly less efficient than ASIC miners – as an increasingly neglected outlier.
Despite announcing its exit from the cryptocurrency market, Nvidia continues to suffer because of its exposure to the GPU mining market, with its stock down 23 percent over the past month. Speaking in the note sent to Susquehanna clients on Tuesday Rolland said:
“We estimate very little revenue from crypto-related GPU sales in the quarter, consistent with management’s prior commentary that they were including no contribution from crypto in their C3Q18 outlook. 3Q18 mining profitability continued to decline, as Ethereum prices have fallen more than -70% since the beginning of 2018.”