If you were not living under a rock, then you might have heard about the global chip shortage. In this blog post, we are going to explain why there is a global chip shortage and why crypto miners have very little to do with it.

We will also answer if crypto miners are the ones to blame for the chip shortage. 

When did it start?

It all started when people realized that COVID-19 is a real threat and there might be economical consequences coming soon. Most companies predicted that the global economy will collapse and the companies reduced the chip orders assuming the orders will drop. This is exactly what the automotive industry did. But surprisingly the demand for new cars soon increased substantially and car manufacturers were left without the chips to produce the cars.

Similarly happened to the computer industry. As people were forced to stay at home the whole family had to use multiple devices at the same time. This meant that the demand for computer chips skyrocketed as well. 

Additionally, people started to use Zoom, Microsoft Teams, Slack, and other cloud solutions exponentially. Zoom traffic has increased by x30 from 2019 to April 2020 (source). This caused a need for upgrading data centers as the old infrastructure could not handle the load. Note that most CPUs used in data centers use the same chiplets as they are used in desktop computers. This again increased the demand for chips.

Let’s not forget that there was a new console generation launch which also contributed to the chip shortage. Chip manufacturing capabilities for PS5 and Xbox Series X could otherwise be used for other products.

What is the reason for the chip shortage?

As explained above, the chip shortage happened globally due to the increased demand for all kinds of chips by consumers. Remember, nowadays chips are used in every smart TV, phone, and even toothbrush, lightbulbs, or toys. 

With people stuck at home in early 2020, the demand skyrocketed. People had to work from home and they needed a way to spend their free time as they were unable to hang out outside. Additionally, a lot of citizens received stimulus packages. People had a lot of disposable money to spend on electronics.

To make things even worse, there is just a handful of companies that produce chips. Supply just cannot meet such high demand.

Are crypto miners to blame for GPU shortage?

Partially, but not completely. As we explained above chip shortage is a result of a generally higher demand for all electronic devices, not just GPUs. 

Another thing to note about GPU production is that GPU manufacturers need to estimate the amount of GPUs they are going to sell after the release. This can be even half a year in advance. Both NVIDIA and AMD did not expect such high demand, so they reserved fewer chips. 

NVIDIA’s CEO Jensen Huang said: “The 3080 and 3090 have a demand issue, not a supply issue. The demand issue is that it is much much greater than we expected — and we expected really a lot.”

Source: nvidia.com

But who bought the GPUs? Miners or Gamers?

Most likely both of them. We can only guess the true ratio between them. Also, a lot of gamers most likely did try mining after all. 

Let’s look at the Steam concurrent users statistics below. We see that the number of active users on Steam peaked from 15 million to almost 25 million in early 2020. It then dropped over the summer and increased again by the spring of 2021 as the second wave of COVID-19 started. This tells us that a lot of people started gaming. Some of them had old GPUs which were needed to be upgraded, thus again increasing the demand side.