Graphics card prices set to fall following cryptocurrency plunge

Graphics card prices set to fall following cryptocurrency plunge

If you've been waiting to upgrade your graphics card but have been put off by the recent spike in prices, we may have some good news for you.

It has recently been reported that over 800 cryptocurrencies now have a negligible value following the recent plunge in Bitcoin, from over $19k in December 2017 to $6,348 yesterday - a fall of 67%. The Bitcoin boom has driven up the price of graphics cards, due to the fact that cryptocurrency miners have been buying them in bulk for mining machines. Indeed, the price for some graphics cards has doubled in recent months, purely as a result of the cryptocurrency boom. The demand for graphics cards was so high that manufacturers struggled to keep up, which in turn drove up prices.

However, the falling value of Bitcoin and other similar currencies coupled with high graphics card prices has lead to demand for these products to fall. According to basic supply and demand economic principles, when demand for a product falls, then (assuming that supply remains the same) the price will fall as the market adjusts.

supply demand.jpg

Basic supply and demand graph - the point of intersection is the market equilibrium
Image: Dallas Epperson / CC BY-SA 3.0

So what does this mean for graphics card prices?
As you can see from the above image, demand for a product increases as the price falls, and the opposite is true for supply - as price increases so does the supply. When a fall in demand takes place the demand line shifts downwards, meaning that manufacturers need to reduce their prices in order to sell all of their stock.

During an investors conference last week, Gigabyte revealed that graphics card sales had fallen 20% during the second quarter of 2018, and issued a warning to investors that profits are expected to fall. According to DigiTimes, "Gigabyte will focus more on promoting graphic cards for gaming devices in the second half of 2018", which is great news for gamers.

Becky Cunningham
First release
Last update

More resources from Becky