NVIDIA Asks Retailers To Stop Selling To Miners & Sell To Gamers Instead

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Jan 19, 2018
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NVIDIA is reportedly asking retailers to stop selling its graphics cards to miners in a bold move by the company to remedy the catastrophic GPU shortage that we’ve seen take hold for the past several months. GPUs are consistently out of stock in all major retailers on a global scale and graphics card prices have seen a two to three fold increase over original MSRPs.

NVIDIA Tells Miners To Take A Hike, Wants Its Cards To Land In The Hands Of Gamers

The company wants its cards to go to gamers instead and it’s trying to do so by directly selling on its website and asking its retail partners to limit orders to two cards per person. When asked to comment, NVIDIA provided the following statement to ComputerBase.de

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Boris Böhles – NVIDIA ( Translated from German to English )
For NVIDIA, gamers come first. All activities related to our GeForce product line are targeted at our main audience. To ensure that GeForce gamers continue to have good GeForce graphics card availability in the current situation, we recommend that our trading partners make the appropriate arrangements to meet gamers’ needs as usual. 

NVIDIA states that retailers have the freedom to follow or ignore its recommendations and that it can’t directly intervene in how they choose to run their businesses. This is where direct-selling by NVIDIA on its website plays a key role. The company can implement all the measures it sees fit to make sure that at least graphics cards sold directly by it, go to gamers instead of miners.

GPUs Are Money Printing Machines And Miners Are Taking Full Advantage

Bitcoin is the gold standard that the entire cryptocurrency market follows, when it soars the entire market goes up and when it goes down the entire market goes down in flames with it. Despite the recent drop in cryptocurrency prices, Bitcoin today is worth more than ten fold what it was worth 12 months ago.

The exponential growth that ASIC resistent cryptocurrencies saw over the past year such as Ethereum have made GPU mining an incredibly lucrative business, even after the most recent market correction.  When it comes to the blockchain each currency is finite and mining the next coin in the chain is more computationally challenging than the last. The expression time is money has never been more true in this sense.

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The order limits that NVIDIA has recommended and many retailers have implemented can help stave off huge orders from customers running big cryptocurrency mining operations. The kind of people that are so desperate to get as many cards as possible in as short amount of time as possible to the point where they’re renting entire Boeing 747s to ship GPUs to their mining farms.

Why Prioritize Gamers If Miners Are Willing To Pay More?

At the end of the day business is just business, so why does NVIDIA want its cards to go to gamers when miners are more than happy to gobble up every last GPU in existence and are more than willing to pay a premium for it? Well, it’s more complicated than that. Miners have no loyalty. To them a GPU is a just a tool, a means to an end.

History has shown us what happens when the cyrpto market crashes, or mining suddenly becomes less profitable.  Miners end up dumping all of their hardware in the gray market for pennies on the dollar and gamers end up picking these used cards instead of taking their business to the GPU manufacturers like NVIDIA and AMD.

The sudden surge of hundreds of thousands of cards in the used market reeks havoc on the market and instead of a severe supply shortage the balance tips to a huge surplus. To the point where the GPU manufacturer is unable to sell their inventory and in some cases have to write it off at a huge loss. This is something AMD had to do back in 2014 after the crypto market crashed and used Radeon GPUs flooded the second hand market.

Gamers Are More Valuable Customers

More importantly, from a business perspective, a gamer is a more valuable customer than a miner. If you win a gamer’s loyalty they’re more likely to buy again from you come upgrade time, or purchase other products from you in the long run. Gaming market share is also a huge bargaining chip when it comes to game optimizations and studio partnership negotiations. As a company, you can get away with more if you have a bigger user-base, that’s just the nature of the beast.

This is why what NVIDIA is doing is really important for its business, whether it’s going to be successful in dropping prices down to levels of sanity or improve GPU supply remains to be a question that only time will answer. But if we’ve learned anything about retailers is that the only thing they care about is their bottom line, and selling to miners at a premium is simply better for their bottom line.

 

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