The Real Reason why GPUs are expensive in 2021

Videocards, particularly Nvidia and AMD high-end graphics card were already expensive in 2020. Just when you thought the price will go down anytime soon, GPU prices are continuously increasing this 2021. Curious to know why? Read this article to know the real reason why GPUs are expensive in 2021.

What are GPUs?

There is a huge increase in the price of computer parts, most especially the Graphic Processing Units (GPUs) for the past year. In case you don’t know, GPU is a chip or electronic circuit which allows you to have a better display output for your PC, allowing you to view multimedia content and rendering 3D graphics in modern video games. GPUs can also process many pieces of data simultaneously, making them useful for machine learning. In 2020, Nvidia and AMD’s latest GPUs were nearly impossible to buy, as the pandemic directly affected manufacturing and supply chains. And up to now, GPU prices keeps on increasing. So why are GPU prices very expensive?

The Real Reason why GPUs are expensive in 2021

What are the factors that contribute to the increasing prices?

1. Law of supply and demand

Generally, when a demand is higher than supply, prices go up.

There has been an increase in the demand of computer units during the past year.  Because of the increase in work from home arrangements, more and more employees had to invest in computer units for their work from home arrangement.

Since kids were unable to go to school physically, parents needed to purchase a desktop PC or a laptop computer for their kids’ online school set-up.  Because of the limited supply, prices of these GPUs tend to go up. It’s almost impossible to buy a GPU card nowadays, and if ever you’re able to buy one, it’s very expensive.

microchip integrated on motherboard

2. The Global Silicon Chip Shortage

A primary component to make a graphics card is a silicon chip. Computer chips, which are also called semiconductors, are mostly made from an element called silicon. Because of the pandemic, semi-conductor manufacturers such as Samsung- weren’t able to produce enough. The stoppage or slow production of these materials, together with the continued rise in demand for consumer electronics like computers and gaming devices, made it difficult for these manufacturers to meet that demand.

As a matter of fact, gaming consoles and major products such as PS5, Xbox and Apple’s Iphone 12, had a setback in launching because of stock availability.

Bitcoin mining farm. IT hardware. Electronic devices with fans. Cryptocurrency miners.

3. More and more cryptocurrency miners

The increase in people mining for bitcoin has greatly affected the demand in supply of these GPUs.  But what exactly is Bitcoin Mining?

Bitcoin mining is the process by which new bitcoins are entered into circulation.  Crypto mining means gaining cryptocurrencies by solving equations which is performed using very sophisticated computers that solve extremely complex computational math problems. This process involves validating data blocks and adding transaction records to a public record (ledger) known as a blockchain.

And since it involves a lot of computing power, it requires a massive amount of GPU to process these transactions. A mining rig may have multiple graphics cards that aren’t running on a desktop setup.

4. Market Scalper

Market scalpers know how valuable these GPUs are so they usually hoard and resell them for huge margins. Many of these would buy directly from manufacturers and resell these GPUs for multiple times the original cost.  If you think GPUs are expensive right now, it will continue to rise in the next couple of months, until the supply keeps up.  For now, those who really need don’t have a choice but to buy used units (most comes from closed computer shops) or buy them at prevailing price. Most of them are more expensive that the pc set itself.

We don’t know when the production of these units are gonna be able to meet the demand. Those who have a limited budget would opt to buying units with a dedicated GPU or used computer sets from gaming shops. It’s important to be always in the look out for news regarding supply and for market prices in your area.