Has Russia become a nation of gaming fanatics? At first look it appears so: CONTEXT figures from the graphics card market show growth of 250% year-on-year in distribution sales for Q1 2018. That’s an increase of €7m to €30m to reach second in Europe behind Germany.
These figures came after an already strong 2017 year for graphics cards across Europe. The market grew by 90% year-on-year for Q1 2018, according to our distribution sales-out data. Nvidia GTX 10 series sales account for 75% of the European year-on-year market growth and Asus has the vendor top spot. Power, performance enhancements and new features have caught the eye of consumers, who waited a relatively long time to change out their older graphics cards as previous 800 and 900 series for Nvidia disappointed in terms of real gains.
But this isn’t the whole story.
A crypto-mining revolution
While graphics cards are a key component in gaming PCs, they’re also vital to the mining of crypto-currency. Can you guess which country is embracing crypto-mining with great enthusiasm? That’s right, Russia.
The truth is that mining for digital currency is an intensive task requiring large amounts of energy to power computers and cool machines. In fact, the process globally now consumes the same amount of electricity every year (33TWh) as Denmark, according a one recent report. Russia is at an advantage in having a cold climate in many parts of the country, plus cheap energy: ideal conditions to build farms of graphics cards to mine crypto-currency.
This isn’t necessarily being done by private enterprises and entrepreneurs with an eye for a quick buck. State-run bank Sberbank recently admitted buying a huge number of graphics cards, even apologising for the shortage which caused prices to double. Russia certainly wouldn’t be the first nation state to embark on a crypto-mining spree to swell its state coffers: North Korea is also said to be investing significant resources into operations in order to skirt international sanctions, although many of its efforts are said to be illegal, relying on botnets of compromised computers to mine currency.
In fact, most of the European markets have seen triple digit-growth in graphics card revenue on the back of rising crypto-currency valuations. So how is the market responding?
Last year we saw the launch of a new “mining” series of graphics cards tailored specifically to this new use case. However, interest has been disappointing and we’ve not seen anything in our distribution sales-out numbers to compare to the growth of standard models. The GTX 1060 and 1070 remain the number one cards for crypto-mining in their power/price combination.
It will be interesting to see how the market evolves this year. Clearly, graphics cards makers believe there is some mileage in developing tailored solutions for the new crypto-mining market, and will be disappointed to see how little impact they’ve made early on. Some will argue they shouldn’t change a winning formula. But either way we’re likely to see some stronger marketing efforts for the new “mining” series going forward.