This Week In GPU Markets - February 4th, 2014

Prices of used 7950 GPUs- still the best price/performance ratio GPU given their electrical consumption- are going up, up, up, despite a (for the moment) weakening scrypt mining market. Random spot price checking on eBay sees MSI 7950 TF3 Boost Edition going for $405.00 at auction, Sapphire 7950 Vapor-X going for up to $430.00, and Gigabyte 7950 WF3 around $375.00. Meanwhile, Newegg is still price gouging for their stock of 7950s as well: $420 for second-rate cards from companies such as HIS and XFX. Tigerdirect (who now, of course accepts Bitcoin directly as a payment method) only has one 7950 in stock, and it is likewise overpriced. And, wrapping up the survey of major retailers, the used market on Amazon continues to be on the high side, with offers at $400+, with limited supply. All this compared to probably the best deal in the near past, on eBay, from Superbiiz (using three different reseller accounts) to offer the Sapphire 7950 20G model along with a Radeon R7 240 for a total of $349 for the pair as a Buy-It-Now. They listed a quantity of perhaps several hundred of these, all were sold within a couple of days, many being purchased 4 or 6 or 10 at a time. Is there any question that the majority of them are being sold to scrypt miners? With the possibility to resell the R7 240 for perhaps $40-50, that brings the total cost for each 7950 close to $300.

Doge Days of Winter

All this at the same time Dogecoin, one of the most fervently mined altcoins and also one that has been consistently on the top five most profitable scrypt-mined coins, is down to 0.0000014 per coin, with a difficulty of 1,109. Calculating for a single undervolted 7950 GPU at a conservative output of 600 kh/s running on .12/kwh electric service, Doge would then be profitable to the tune of $5.50 per day. With the average price of a 7950 floating somewhere close to $400, this calculates to 72.72 days, almost 2.5 months, of Doge mining to reach break-even. Although in some perspectives this may seem like a small amount of time, it is appreciably higher than the ROI (return on investment) projections of a month ago.

Why the appreciation?

So, why are GPU prices continuing to appreciate? May it be that miners are continuing to stock up on GPUs now, in anticipation of yet another altcoin goldrush moment as we saw in late December with the explosion of Doge? Or might it have something to do with the extremely shaky fiat markets as of late, as the World Reserve Currency, the dollar, plays with “tapering” and begins to destroy emerging markets of the second and third world? As the Dow Jones takes massive hits, and the US Postal service considers Bitcoin and even their own altcoin? Whatever the reason may be, a significant amount of miners must believe that scrypt mining is here to stay, at least for long enough to recoup hardware and electric costs. Belief enough to pay roughly $100 over the retail price of these GPUs almost a year ago. Supply and demand… and the demand continues. With the arrival of Scrypt ASICs that outperform GPUs somewhere on the horizon (Alpha Technology's units are expected in mid-July, at least according to their roadmap), and assuming the altcoin market stays at least as profitable as it is currently (a large assumption to be sure, especially considering difficulty changes), that gives at least two or three months of profitability for GPU miners if they started today, though that takes into account only the cost of the GPU and the electricity it consumes, rather than the entire cost of a dedicated mining rig. If there are delays in any scrypt ASIC actually making it to market (not an unreasonable thought given the trouble first generation SHA-256 ASICs had), we may see GPU mining profitability continue for an even longer time, perhaps even through the rest of this year. A year, of course, is a long, long time in the cryptocurrency space. The future is unpredictable, but whatever it may hold, a considerable amount of people are betting on the continued success of scrypt-mined coins.

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