Coin Miners, AI Projects Cause Chip Shortages

Demand from mining companies and AI developers squeezes the market for graphics processing chips.

by Kyzmoff
10 May • 2 min
In Mining
Graphics processing chips (GPUs), originally designed to render visuals for computer games and video software, have become an essential tool for the creation of Artificial Intelligence technologies. Almost every AI company relies on GPUs, due to the large amount of data that needs to be processed for the development of AI. Speculators in the cryptocurrency market are also tapping into the GPUs for a very different purpose. With the help of machines called rigs that calculate a large amount of data for the Ethereum and Bitcoin networks, people and businesses receive payments in the form of newly created digital coins. In this process called digital mining, GPUs are vital for processing the math required to create new coins.
 
Crypto miners bought over three million GPU rigs — boards that can be added to personal and other computers — worth about USD 776 million last year, according to Jon Peddie, an analyst who tracks chip sales. That may not sound like a lot in a market worth billions, but the combination of AI developers, crypto miners, and gamers is disrupting the GPU supply. Things apparently are so tight that GPU retailers have even restricted the number of GPU products a miner can buy each day.
 
To build an AI system, that can analyze digital photos and learn to recognize objects in real time for autonomous driving purposes, requires an enormous number of photo and video data, and analyzing all that data is enabled with GPU chips. In order for the artificial technology to advance, hardware constantly needs to be upgraded but when a company purchases new chips the shipment usually gets delayed for weeks. And the price of the chips keeps rising. The inability to get hands on the best GPUs is slowing down research and development. 
 
The largest video card makers in the world Nvidia and AMD are also experiencing issues with the supply chain and low inventories. They cannot produce chips fast enough to meet the demand. Supply shortages prompted many big names like Apple, Google, and Facebook to insource the chip manufacturing. Others, like Chinese chipmaker Bitmain, released new chips specifically for mining Ethereum or Bitcoin called ASICs or application-specific integrated circuits - microchips designed for special applications, such as mining coins. 
 
 
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Despite the several other companies designing ASIC chips, it would be hard to take the pressure off Nvidia and AMD. Due to ASIC chips' strict design, it is impossible to adjust them to mine another cryptocurrency or when an upgrade to the Ethereum or Bitcoin network is implemented they are simply rendered useless and need to be replaced. That is why most consumers and miners still prefer Nvidia and AMD's multipurpose video cards. 
 
Interest in digital coin mining could potentially cool off, but the same cannot be said for Artificial Intelligence projects and gaming platforms, whose demand is through the roof and shows no signs of slowing down any time soon.