Ethereum GPU Mining Profitability Has Declined Dramatically: New Research

ethereum Blockchain EEA

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 indicate 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.com 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.

Source: Susquehanna

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.”

Featured image from Shutterstock.

Samburaj Das edited this article for CCN.com. If you see a breach of our Code of Ethics or find a factual, spelling, or grammar error, please contact us.

Subscribe
Notify of
0 Comments
Inline Feedbacks
View all comments

* All comments must be approved by staff before appearing on CCN.com. We do not allow bad language, hate speech, nor verbal attacks on staff or other commentators. Some comments may be edited for clarification or if they are in breach of our comment policy. If you wish to delete your comment or data, please contact us.

David Hundeyin

David Hundeyin

I am a busy Nigerian writer, journalist and writer with an interest in tech and finance. When I'm not contributing to CCN and traveling around Africa, you can catch me contributing to CNN Africa, or in the writers room at 'The Other News', Nigeria's weekly answer to 'The Daily Show' with nearly 2 million viewers. My work on 'The Other News' was featured in the New Yorker Magazine, and that was then cited in the Washington Post so I'm not sure that counts as a feature but I'll definitely mention it too! I have been nominated by the US State Department to take part in the 2019 Edward R. Murrow Program for journalists under the International Visitors Leadership Program. I also like hamsters. You can reach me on Twitter at _David_Hundeyin

More from this author: