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Ethereum's switch to POS hits Taiwanese GPU makers' stock prices

Transition away from mining on world’s second-largest chain dampens demand for graphics cards

MSI graphics cards. (Facebook, MSI Gaming photo)

MSI graphics cards. (Facebook, MSI Gaming photo)

TAIPEI (Taiwan News) — Share prices of Taiwanese graphics card makers Gigabyte and MSI are down as demand dips for their products ahead of a transition away from proof-of-work mining by the Ethereum blockchain network.

Reflecting this shift in the market, GPU prices have recently fallen precipitously, with the cost of some units slashed by over 50%, CoinDesk reported. This is hitting the share price for Taiwanese vendors who depend solely on graphics card sales particularly hard.

As of Monday (March 28), the stock prices of Gigabyte and MSI are both down 16% a year to date, yet ASUS, which also generates revenue from its own branded PCs, tablets, and phones, remains roughly steady.

All three firms have experienced strong growth throughout the pandemic and have benefited from the concurrent crypto bull run which drove up demand for their graphics cards. Yet now that Ethereum is transitioning to a proof-of-stake consensus mechanism to validate transactions, that demand has slowed significantly.

With proof-of-stake, holders of Ethereum’s token ether use their tokens to validate transactions on the network by staking them in a bond-like savings pool in return for a yield. This is radically different from proof-of-work, in which users set up mining rigs to solve complex equations to validate the transactions, for which they are rewarded with ether tokens in the process.