Cryptocurrency miners need powerful computers – edging other users including professionals and gamers out of the market.The low supply and high demand for semiconductors and computing hardware will prolong the current situation for at least another year.The silver lining is that mining is being prohibited in some regions, and the largest cryptocurrencies are looking to move away from mining.Cryptocurrencies are based on blockchains. In turn, blockchains need miners to verify transactions and maintain their integrity.As a result, cryptocurrency mining has become infamous for expending a lot of coal-generated power on virtual money (91 TeraWatts last year), pushing up PC gaming hardware prices, and making a chip shortage worse during a year when the world was already battling a pandemic.Some believe that mining has grown so big over the past decade that it has become a nightmare for PC enthusiasts. It’s a convenient bogeyman to blame whenever prices of computer components rise due to a shortage.However, it’s not all bad. Cryptocurrency mining seems to have some redeeming qualities as well. Among other reasons, mining happens to be a bright spot that increases demand for consumer desktop PC hardware, pushing for improved performance and energy efficiency that benefits everyone and keeps the segment alive for gamers.How cryptocurrency mining has affected five components of the PC marketThe first component of a PC to bear the brunt of cryptocurrency mining is the processor (CPU). A weak or powerful processor sets the pace for the rest of your desktop/laptop. Unfortunately, this is also the most important part for people who are mining Bitcoin or Dogecoin. Intel and AMD have separately said the semiconductor shortage may not ease up until 2023.When it comes to graphics cards (GPU), the most recent ones are preferred as they will draw less electricity and display better visuals – for your games, CAD applications, virtual reality simulations or metaverse meetings.Coincidentally, a potent GPU that doesn’t consume much power is exactly what miners of Monero and Ethereum want. This allows them to mine more but spend less, leading to higher profit margins for them. In the battle between gamers and miners, chip manufacturer Nvidia has implemented ‘anti-crypto mining’ measures recently — but frustrated gamers have wished for a ‘crypto crash’ since 2015 at least.Moverover, computer builders operate with a thumb-rule of stuffing in as much RAM as they can for a given price point, to ensure faster system operation. Prices for this part began to come down in 2019, but promptly increased soon after, in the midst of the challenges 2020 threw at the world.Some cryptocurrencies are even mined using hard disk space — both HDDs and SSDs. Ever growing storage capacity is eagerly harnessed for ‘plots’ of Chia coin by ‘farmers’ who buy up many petabytes worth of drives, and hope to pay for that from their crypto profits. That leaves larger capacity drives out of reach of home users, who are creating and need to store more high-resolution photos and videos than ever.This practice by ‘Chia farmers’ has even led to brands reducing warranties upon SSDs — typically known to have a longer life than that of HDDs.And finally, people who assemble their own computers for home usage, tend to use a power supply unit (PSU) rated for a higher wattage than the expected power consumption. However, miners tend to buy up most of the good units available through retail channels, leaving other users twiddling their thumbs. In response to this and rising price of metals, brands released units one rung below enthusiast quality, and then one rung further below – which still manage to sell like hot cakes due to the shortage of good PSUs.PC PartModel2018 Oct2020 Feb2021 OctIncrease in price over the last two yearsCPUAMD Ryzen 8core processor₹17000₹13890₹2400041.20%GPUGeForce GTX 1050 Ti₹11500₹7600₹1500030.40%RAMCorsair Vengeance DDR4 8GB 3200MHz₹5000₹4100₹4900-2%HDDSeagate 4TB Barracuda CMR₹7400₹6700₹920024.30%PSUAntec 700W VP700P₹4300₹3900₹45004.70%NOTE: All prices are in INR excluding taxes, showing offline retail channel prices (not online deal prices).Prices of PC components tend come down as technology usually does between 2019 to 2020, but shoot back up with 2020-21’s crypto rise. We’d like to note that these products are not very high end today either. As computer hardware is made obsolete by newer and better products, you would expect that all of them would be cheaper in 2021, than they were in 2018, sadly they aren’t.In summary, the prices inflated by miner demand end up making economic sense only to miners — which is unfortunate for those with more reasonable budgets, be it an everyday independent professional, a student or a gamer.The supply and demand mismatch In a normal year — not one overwhelmed by the pandemic — such prices of PC components might have meant an exodus to console gaming. However, even the latest game consoles such as a Microsoft Xbox XSX and Sony PlayStation 5 are short on supply.That is one of the reasons India’s high-end gamers cite on forums, for holding onto PC components that are over five years old, such as the GeForce GTX 1080 graphics card which was released in 2015. To illustrate how the market is upended by crypto mining, Subhramani Iyer, a desktop PC gamer said, “I had bought my GeForce GTX 1060 GPU in 2017 and sold it to an Ethereum miner in 2021, four years later with no warranty remaining – at a profit.” Older-gen processors, graphics cards have always sold at a discount compared to their launch or purchase price. But in the last year, used CPU/GPUs have sold at close to the ‘new in box’ prices. That distortion is not just because of supply issues, which is almost steady since four years now. I blame Ethereum’s value rising from $200 to $4000 levels in that period.Sovit Loomba, Proprietor of Pronet Services, a computing services firm in Bangalore, told Business InsiderIn the second-hand market, the bottleneck in supply has meant distorted prices with prices doubling in some cases. The trends towards online schooling and work-from-home, in particular, have driven up demand. This writer has seen a 2004-made Centrino laptop hitherto valued at zero, selling at ₹ 10,000 recently. On online platforms, new laptops that used to be listed at ₹16,000 stand at ₹30,000 now and still manage to sell out.Explosive interest in cryptocurrency mining hen the cash value of cryptocurrency grows as fast as it currently is — with Bitcoin doubling in value this year to date — many of those who understand the technicalities prefer to ‘mine’ for them rather than buy the tokens off an exchange, in an attempt to ‘technically’ get it for free.A lot of people, including well-funded companies seem to have the same idea though. So, the total computing power thrown at mining a crypto coin, or the ‘hash rate’ of the network keeps growing, forcing miners to keep upgrading their CPU/GPU/HDD to continue to reap rewards.At the current high prices of crypto though, miners are able to recoup their investment on CPU/GPU/HDD in six to nine months, even at today’s overpriced levels. They factor this into their decision to buy available stock, further increasing the price of components and crowding ordinary PC users out of the market. Whether turning away ordinary users will kill the PC itself as a segment in the long run, remains to be seen.If you’re tempted to begin crypto mining on your desktop at home, remember that the biggest cost of mining is the electricity consumed. Also, one would have to jump in with large scale computing power to have any hope of making money out of it. Simply put, miners starting today would need a bucket load of capital to buy the equipment needed to set up. Mining with just one or two machines will simply leave you with a large electricity bill, worn out PC components, and hardly any mined coin to show for the effort. A small farm of 18 specialised ASIC machines mining for cryptocurrency.RedditThose with a large cluster of computers would need to chase quick results, since both Bitcoin and Ethereum are on track to move away from power-intensive methods of mining. As a miner, be prepared for new regulations. At least a few regions in the world — prominently China and Malaysia — have prohibited or banned mining activity considering its toll on power grids. To rehabilitate their reputation as energy hogs, bitcoin mining companies like Riot Blockchain have begun trying to source ‘cleaner’ energy from renewable/green power plants.The demand for miners, and why they’re now necessary ‘Mining’ for cryptocurrency is essential to obtain new crypto ‘coins’ for circulation, and to maintain the blockchain or decentralised ledger that is at the heart of securing transactions made with them. The large-scale computing power provided by ‘miners’, used to be extremely profitable to the people running them.Now however, mining has devolved into a hostage situation. Miners understand that they are unpopular and would like to stop, but cannot until they have paid back loans that purchased their expensive computing hardware. In the meantime, a reasonably strong community of miners is still needed to uphold the integrity, as it were, of cryptocurrency transactions that have seen explosive growth.We may simply have to accept the situation until more efficient computing hardware is released in 2024. To their credit, analysing hardware shipment data over the course of last year seems to indicate that miners aren’t even the biggest buyers – that title goes to large companies with their ever-expanding data centres.