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GPU Wars: NVIDIA, AI, Gaming and Crypto. Part 1 - The Rise of Nvidia in Gaming

Aug 30, 2023
byNDAX Labs

In the world of technology, GPUs (graphic processing units) are some of the most sought-after components due to their extensive applications in the gaming industry, metaverse, and the crypto world.

The use of graphics cards in crypto mining has skyrocketed over the past few years, causing GPU manufacturers to take strict measures to manage supply.

In 2021, for instance, Nvidia said it was deliberately reducing the capabilities of its graphics cards by 50% when it is used to mine Ethereum. Crypto enthusiasts had contributed to a shortage of GPUs by snapping up suppliers for non-gaming purposes. In response, the company decided to sell a range of crypto mining processors (CMPs). But graphics cards aren't only popular in gaming and crypto mining. Graphics processing units (GPUs) also play a significant role in how data is managed in the metaverse. Nvidia's GPUs, in particular, already dominate in gaming and 3D simulation, setting the company up as a key player in the metaverse.

That said, there has been a growing overlap between gamers and crypto enthusiasts in utilizing GPUs for mining and blockchain-related activities, like the metaverse. We'll dig deeper into this overlap and explore the relationship between video games, metaverse, and crypto assets.

The Rise of Nvidia in Gaming

Nvidia's dominance in providing high-powered GPUs for gaming and other applications has made it a juggernaut in the computer graphics space.

The company started making chips in 1993 but didn't release any graphics product to the public until 1995 when the NV1 was launched. Between 1995 and 1998, the company released three more products—Nvidia RIVA 128, Nvidia NV4, and Nvidia NV5. These graphic cards performed relatively well and featured clock speeds of up to 150 MHz and 32 Mb of VRAM. In 1999, the company released the first GeForce model, the GeForce 256. It improved upon the first previous RIVA cards by offering big leads in gaming performance. The card operated up to 166MHz and offered support for up to 64MB of DDR SDRAM.

The GeForce models became the company's powerhouse chips and the standard for gaming—which has not changed to date. The company continued to tweak and improve the GeForce models, and between 1999 and 2023, over 15 Nvidia GeForce variations were released, including the current Nvidia GeForce 40 Series. Nvidia continues to push boundaries with each iteration, making the GeForce series ideal for gaming and other graphic-intensive applications like crypto mining.

The flagship GeForce RTX 4090 is arguably the most powerful graphics card on the market and is powerful enough to play 8K games. Additionally, it packs a staggering 24Gb VRAM and features 512 tensor cores which helps improve the speed of machine learning applications. Nvidia's dominance with the GeForce series has led to increased innovation in AI and blockchain-related activities, like the metaverse. In May 2023, the company became the first chipmaker to reach a $1.6 trillion market capitalization.

GPUs, the Metaverse, and Crypto Mining

There are 3 ways in which you can obtain Bitcoin and other crypto assets.

You can buy them on a trading platform like NDAX. Receive them as payments for goods or services rendered. Or virtually "mine them"—and this is where GPUs become useful. Mining is the process by which new crypto assets are entered into circulation. It's the process by which networks of specialized computers generate and release new crypto and verify new transactions. The mining process involves vast, decentralized networks of computers around the world that verify and secure blockchains.

So, how do graphic cards fit into the mining picture?

To find crypto blocks, miners have to solve complex mathematical problems and verify transaction blocks. And this is where GPUs come in. Graphics cards are great for mining because they can compute the blockchain's complex equations quickly and efficiently. Nvidia GeForce series are particularly great at solving these equations due to their enormous processing power. But what makes them good for mining?

In 2018, Nvidia launched the RTX-20 series, which laid the foundation for the Turing GPU architecture. The series offered GDDR6 memory, an improved version of the then-standard GDDR5. The GDDR6 also offered increased memory speed from 8 Gbps to 14 – 16 Gbps. Additionally, it increased the number of CUDA cores and transistors, making it a faster and more efficient system for mining.

Two years later, the RTX-30 series was released and substantially improved over the RTX-20 Series. This was followed by the RTX-40 series, which raised the bar even higher, offering 16,384 CUDA cores, up to 24GB memory size, twice the number of transistors, and other mining-friendly features, like tensor cores and ray tracing.

Not only does the GeForce series offer higher performance and resolutions for gaming, but it also provides more powerful hardware for crypto mining. Most importantly, GeForce GPUs provide a good balance between cost and performance. These graphic cards cost less and use less electricity compared to their AMD counterparts. For this reason, they're considered the most profitable cards to mine with. Note that these cards (or any other) are not profitable for mining Bitcoin. However, they work best with other cryptos, such as Ethereum. Mining Bitcoin requires ASIC hardware, a specialized computer system that generates a much higher hash rate and with less power than even the most powerful GPUs from Nvidia.

The Relationship Between Video Games, Metaverse, and Crypto Assets

A metaverse is a shared online 3D space where users can virtually interact with each other and with computer-generated objects. It uses virtual reality (VR), augmented reality (AR), and other advanced technologies to allow people to have lifelike personal/business experiences online.

What does gaming have to do with the metaverse?

Gaming is often associated with the metaverse for this reason: The metaverse is inherently social—a trait that distinguishes it from solo VR experiences. That said, gaming is one of the things users do in the metaverse. In fact, gaming is one of the industries that make maximum use of the metaverse, providing users with the gaming experience of the next generation. Using AR and VR capabilities, multiplayer gaming in the metaverse allows players to invite friends from the real world, interact with other players, and build relationships.

So, what's the relationship between video games, metaverse, and crypto assets?

It all comes down to crypto-gaming, a new model that has emerged for businesses and the gaming community. Crypto-gaming utilizes cryptocurrencies and NFTs for in-game purchases, which can be converted into real-life money.

Crypto gaming utilizes the blockchain (decentralized networks) to make gaming more secure with protected data encryptions, making it impossible for anyone to hack or cheat the system. These decentralized marketplaces allow for an open and transparent economy, enabling gamers to buy, sell, and trade assets without intermediaries. Better still, crypto gaming allows actual ownership of in-game assets, which makes it more exciting and competitive than other games on the market. The metaverse helps drive blockchain games, allowing players to earn real money and collect valuable NFTs.

Players can sell these NFTs in the open market, creating a new revenue stream and motivating themselves to invest more time in the metaverse. Some of the games utilizing blockchain technology include Decentraland (which allows gamers to buy and sell plots as NFTs), The Sandbox, CryptoKitties, and Axie Infinity. Read more on Play2Earn games.

Gaming GPUs, Artificial Intelligence (AI), and the Crypto Market

The prices of graphics cards have soared recently as cryptocurrency miners are buying them in bulk. The increased demand has led to a shortage, making it hard for gamers and regular consumers to find affordable GPUs.

In January, Nvidia stated that it was not happy with the rising prices of GPUs and advised that retailers take action to ensure the needs of gamers are met.

"We know that demand for cryptocurrency miners is a huge factor contributing to the rising prices of graphics cards. To us, gaming comes first." Wrote Nvidia in a German post. All activities related to our GeForce product line are targeted at our main audience—gamers.

So, how have the prices gone?

The price has more than doubled for some of the high-in-demand graphics cards. For instance, the popular Nvidia GeForce 1060 retailed as low as $200 in 2017. In January 2018, the price was somewhere between $400 and $800. Meanwhile, the GTX 1080 Ti that retailed for $700 sold for $1,400 on Amazon and $1,200 on Newegg.

Crypto miners have contributed to the graphic card shortage by snapping up suppliers for mining purposes. Why the shortage? Cryptocurrency miners use several GPUs at a time to build a powerful machine capable of efficient crypto mining. For the rig to be economical, it must produce more crypto than the cost of the hardware and the power it uses to run.

Stay tuned for the next instalment (when?) where we look at NVIDIA's approach to solving the issues of Graphic Card scarcity and effectiveness.

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Disclaimer: This article is not intended to provide investment, legal, accounting, tax or any other advice and should not be relied on in that or any other regard. The information contained herein is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of cryptocurrencies or otherwise.