Although traders don’t need as much graphics power as gamers, we still need above-average graphics cards to display our many trading charts. So even if you’re not a gamer, if the price of graphics cards goes up dramatically, you could feel it in the sticker price for your next trading computer.
In today’s post, I want to look at why graphics card prices have been on the rise.
Unless you’re a gamer or have gamers among friends and family, you might not be aware that over the last year graphics card prices have gone up. And you might have missed the “out of stock” notice for graphics cards from certain manufacturers if you haven’t needed to buy one online.
The culprit for this price increase is cryptocurrency mining. In order to help you understand what is happening, here’s a crash course in blockchain.
Cryptocurrencies, Blockchain, and Mining
Bitcoin is the most famous cryptocurrency, but there are lots of others like ethereum, dash, litecoin, ripple, and more. All of these cryptocurrencies depend on the same technology called blockchain.
So what is blockchain? It is a distributed digital ledger.
In order to understand blockchain, let’s create a simple example.
Suppose you are teaching a group of students how to become day traders. During the class, you need to keep track of their transactions, so you need a ledger. Also, you want to put it up on the class wall and make sure that it is tamper-proof. In order to achieve this goal, you come up with the following plan:
- As your students work as day traders, you will write down all the transactions on a piece of paper.
- Once the paper is full, you will ask for volunteers. Each volunteer will make a copy of the full transaction page and start laminating their copies.
- The person who gets the lamination ready first will be declared the winner. The winners can pay themselves some predetermined currency on the transaction page before sealing the lamination. The payment is the reward for volunteering for the lamination work.
- Once the page is laminated, it will be glued to the side of the last page of the ledger.
- As the semester progresses and student day traders keep making new transactions, new pages will get added to the ledger on the class wall. Because the laminated pages are all chained together, trying to change a single page on the ledger will take a lot of work.
So the ledger displaying all the day trading transactions is basically the blockchain, the volunteers who laminate the papers are miners, and the lamination work is called mining.
Relationship of Mining and Graphics Card
In real blockchains, the lamination and adding pages to the digital ledger are achieved using mathematical principles of cryptography. When a transaction page needs to be added, the miners have to solve a mathematical puzzle that needs a lot of computer power. The winner gets rewarded with cryptocurrencies. That’s the motivation for miners to take up the work. Also, the rewards awarded to the miners are new units of the currency. So the process of mining is almost like prospecting for precious metals.
When cryptocurrency started, miners were using their personal computers, not too different than the ones you use as a trader. But soon miners realized that graphics cards are faster at solving cryptographic math problems. These cards improve the chances of earning cryptocurrencies. So the miners started using them regularly.
Today multi-million dollar data centers are being established for the sole purpose of mining cryptocurrencies. And these data centers need a lot of graphics cards. At the same time, individuals are still mining. So large data centers and small miners are grabbing up all the cards from the market.
The Conundrum for Graphics Card Manufacturers
Prominent graphics card manufacturers like Nvidia and AMD are trying to figure out how to handle the situation. The rumor is that they will create crypto-mining-specific cards that will have no video outputs but will be cheaper.
Such a design will keep the gaming and mining markets separate. The manufacturers don’t want to alienate their gaming customers because of hiked-up prices or lack of supply.
With the recent dip in cryptocurrencies, the demand for mining might decrease drastically. It could solve the price and supply problem on its own. But for now, prices are rising.
I hope you enjoyed learning about blockchain and its effect on graphics cards. Even with rising graphics card costs, EZ Trading Computers is still committed to providing you with high-quality, affordable options. To learn more about our prices and special deals, call us today at 800-387-5250.
There are more trading computer tips like this in our buyers guide. Check out our “How To Buy a Trading Computer” e-book.
We hope today’s Quick Tip helped you. If you found this helpful, you’ll want to check out the other computer How-To’s I’ve created on this page. You can always call us if you have questions: 800-387-5250