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GPU Prices and Cryptocurrency Returns. Is the crypto boom creating a semiconductor shortage? with Linus Wilson #15
Dr. Linus Wilson discusses and reads his most recent study about the cryptocurrency mining and computer hardware prices entitled "GPU Prices and Cryptocurrency Returns".
"Abstract
We look at the association between the price of a cryptocurrency and the secondary market prices
of the hardware used to mine it. We find the prices of the most efficient Graphical Processing Units
(GPUs) for Ethereum mining are significantly positively correlated with the daily price returns to
that cryptocurrency.
Journal of Economic Literature Codes: G12, G23, L11, L22, L63
Keywords: 3080, ASIC, Bitcoin, crypto, cryptocurrency, ETH, Ethereum, GeForce, GPU,
mining, Nvidia, RTX
by
Dr. Linus Wilson
Associate Professor of Finance
Department of Economics & Finance
B.I. Moody III College of Business
University of Louisiana at Lafayette "
"1. Introduction
We use a unique data set of scalper prices for graphical processing units (GPUs) to study
the association between the price of Ethereum (ticker ETH) and the hardware used to mine it.
We find the most efficient ETH mining GPUs as measured by secondary market price per
productivity unit (called the hashrate) had secondary market price moves that were positively
correlated with daily returns to ETH.
Most of the prior research into cryptocurrency mining has focussed on Bitcoin and does
not measure the impact between the cryptocurrency’s price’s correlation with key mining
hardware. Dimitri (2017) and Ma et al. (2019) model Bitcoin mining as an all-pay tournament.
Ma et al. (2019) argue that free entry in mining is ultimately wasteful in part because Bitcoin
miners consumed more electricity than all of Australia. Easley et al. (2019) are sceptical about
the usefulness of Bitcoin as a medium of exchange as its network could only process seven
transactions per second versus Visa which can process 50,000 transactions per second. Cong et
al. (2021) find that mining pools help cryptocurrency miners eliminate ideosyncratic risk.
Kristoufek (2020) finds that price of Bitcoin over the long-term impacted the cost of mining
components. Mueller (2020) looks at entry and exit thresholds for both Bitcoin and Ethereum
miners.
In section 2, the GPU mining market for cryptocurrency is discussed and basic model of
GPU pricing with ETH mining is developed. The data sources are discussed in section 3. In
section 4, the statistical analysis indicates that the Nvidia GeForce RTX 3060ti and the RTX
3080 GPUs are significantly more attractively priced for ETH mining, and their prices are
positively correlated with daily price moves in Ethereum. "
The paper link is at
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3922181
(c) Linus Wilson, 2021, Vermilion Advisory Services, LLC
www.linuswilson.com
www.financeprofessor.org
www.financeprofessor.net
View all episodes
By Linus WilsonDr. Linus Wilson discusses and reads his most recent study about the cryptocurrency mining and computer hardware prices entitled "GPU Prices and Cryptocurrency Returns".
"Abstract
We look at the association between the price of a cryptocurrency and the secondary market prices
of the hardware used to mine it. We find the prices of the most efficient Graphical Processing Units
(GPUs) for Ethereum mining are significantly positively correlated with the daily price returns to
that cryptocurrency.
Journal of Economic Literature Codes: G12, G23, L11, L22, L63
Keywords: 3080, ASIC, Bitcoin, crypto, cryptocurrency, ETH, Ethereum, GeForce, GPU,
mining, Nvidia, RTX
by
Dr. Linus Wilson
Associate Professor of Finance
Department of Economics & Finance
B.I. Moody III College of Business
University of Louisiana at Lafayette "
"1. Introduction
We use a unique data set of scalper prices for graphical processing units (GPUs) to study
the association between the price of Ethereum (ticker ETH) and the hardware used to mine it.
We find the most efficient ETH mining GPUs as measured by secondary market price per
productivity unit (called the hashrate) had secondary market price moves that were positively
correlated with daily returns to ETH.
Most of the prior research into cryptocurrency mining has focussed on Bitcoin and does
not measure the impact between the cryptocurrency’s price’s correlation with key mining
hardware. Dimitri (2017) and Ma et al. (2019) model Bitcoin mining as an all-pay tournament.
Ma et al. (2019) argue that free entry in mining is ultimately wasteful in part because Bitcoin
miners consumed more electricity than all of Australia. Easley et al. (2019) are sceptical about
the usefulness of Bitcoin as a medium of exchange as its network could only process seven
transactions per second versus Visa which can process 50,000 transactions per second. Cong et
al. (2021) find that mining pools help cryptocurrency miners eliminate ideosyncratic risk.
Kristoufek (2020) finds that price of Bitcoin over the long-term impacted the cost of mining
components. Mueller (2020) looks at entry and exit thresholds for both Bitcoin and Ethereum
miners.
In section 2, the GPU mining market for cryptocurrency is discussed and basic model of
GPU pricing with ETH mining is developed. The data sources are discussed in section 3. In
section 4, the statistical analysis indicates that the Nvidia GeForce RTX 3060ti and the RTX
3080 GPUs are significantly more attractively priced for ETH mining, and their prices are
positively correlated with daily price moves in Ethereum. "
The paper link is at
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3922181
(c) Linus Wilson, 2021, Vermilion Advisory Services, LLC
www.linuswilson.com
www.financeprofessor.org
www.financeprofessor.net