The Rise and Fall (and Potential Rebirth) of GPUs in Blockchain

The Intersection of Blockchain and GPUs: A History and Future

At one point, the ability to mine Bitcoin and other cryptocurrencies using graphics processing units (GPUs) was extremely profitable. The efficiency of GPUs in solving hashing algorithms made them a vital part of mining computers, which drove up the price and caused a shortage in the supply of cards capable of mining cryptocurrency. Here is a synopsis of the period when cryptocurrency mining generated immense profits for miners and GPU makers, resulting in a GPU shortage. It also includes a brief discussion on what the future might hold for blockchain and GPUs.

Key Takeaways

• Exponential growth in cryptocurrency prices and an increase in GPU demand led to higher manufacturer sales.
• GPUs are no longer a profitable way to earn cryptocurrencies by mining, so their use in the industry has waned.
• Blockchains can still make use of GPU computational power because there are many applications that could benefit from distributed GPU power.

:max_bytes(150000):strip_icc():format(webp)/GettyImages-2169861965-fbfe9dcf49334661b84c2e09b2a652f5.jpg)

Blockchain and GPU History

The cryptocurrency boom that began around 2016 attracted substantial interest from entrepreneurs, businesses, and investors. Mining became an incredibly profitable endeavor, making it more appealing to individuals with computer idle time that could be put to use. As more people joined the networks, mining difficulty levels increased due to how the blockchains of the most popular cryptocurrencies were programmed at the time. CPUs, previously adequate for mining, fell behind in processing power as the race (and the pace) to discover cryptographic solutions increased. The values of cryptocurrencies began to rise very quickly, attracting even more users, and home computer mining fell out of fashion as people designed mining rigs with more hashing power using multiple GPUs.

Miners turned to computers dedicated only to cryptocurrency mining, which sometimes had more than eight graphics cards working in tandem to solve cryptographic hashes.

Causes of the GPU Shortage

This increasing need for bigger and faster mining computers created a serious problem in the GPU and computer components markets. In 2016, gamers and designers began to notice a shortage of GPUs available on the usual retailer sites. By the middle of 2017, there was a shortage of GPUs on the market as miners had been buying GPUs in bulk faster than they could be produced. Prices skyrocketed for even lower-tier graphics cards, and many stores and retailers had to establish measures to prevent single users from buying out their supply.

For example, eVGA, at the time a popular GPU manufacturer, implemented a waiting list on its shopping page. NewEgg, an online retailer popular with computer builders, implemented a similar measure. Similar mass shortages affected retail users and academia, where scientists requiring heavy processing power for advanced studies such as astronomy, genetics, and mathematics couldn’t purchase the latest graphics cards to perform their work.

Future of Blockchain and GPUs

Beyond mining, blockchain and GPUs present an ideal pairing. The distributed networks offered by blockchain give users a way to disperse computing power, leveraging the sum of its users to create “virtual supercomputers” that rely on the network’s collective power. Furthermore, there remains an increasing demand for computing-as-a-service, as evidenced by the growing popularity of cloud computing and the GPU-as-a-service market. Several major tech companies already offer these services, although they remain fully centralized and thus somewhat inefficient. Google Cloud offers GPU services, as does Amazon Web Services, and even Nvidia has started delivering solutions. Others are creating platforms that use blockchain to harness distributed GPU computing power.

For example, the Render Network uses the Solana blockchain, network, and proprietary cloud rendering software to match computational requests with GPU rendering power. Clore.AI allows users to host a GPU and rent it to others who need more power for AI applications, mining, or rendering. Neura is a blockchain created for AI purposes that provides a network of GPU hosts. The company’s website claims it can allow AI builders to ” launch and scale AI with flexible, affordable, on-demand compute.” AI is being combined with and overtaking blockchain and cryptocurrency in much of the tech industry. GPUs are likely to become much more in demand yet again for use in blockchain projects if ideas like Neura attract businesses, developers, and investors because they can handle computational tasks much faster than CPUs.

FAQs

What is the GPU Industry?

The graphics processing unit industry includes GPU manufacturers. GPUs are used in many devices requiring signals, data, and other information to translate to another device that displays it, such as a monitor or other type of screen. Due to their speed, they find use in artificial intelligence, machine learning applications, and analytics.

What is a GPU in Blockchain?

GPUs can process data quicker than CPUs in blockchain applications. GPUs are sometimes used to validate transactions and perform other work.

Why Do Crypto Miners Use GPUs?

Crypto miners used GPUs extensively in the past because they were much quicker than other methods. However, most cryptocurrencies worth mining can no longer be profitably mined on GPUs because of their competitive processes.

The Bottom Line

While blockchains once enabled the GPU industry to revolutionize its sales model collectively, as of October 2024, GPUs were no longer profitable to use for cryptocurrency mining. However, other GPU blockchain applications are emerging. While these uses are not yet as profitable as cryptocurrency mining, blockchains can still use distributed GPU computing power to conduct many tasks quicker and more efficiently than relying on single GPUs, other computers, or small networks.