Free Market Efficiency vs GPU Scalpers

[Hydrogen]

Economists have a tendency to overgeneralize free markets as providing customers with ideal efficiency in producing and dispensing goods and services.

The past 20 years have seemed hellbent on putting notions of free market efficiency through rigorous stress tests.

In 2015 Martin Shkreli's investment group bought out existing stockpiles of the HIV drug daraprin. Having cornered the market they resold the drug at 4,000 times its previous value. One example of inefficiency present in free markets.

In 2021 GPU scalpers (wallstreet investment groups?) following in Martin Shkreli's footsteps bought out more than 53,000 new GPU units, to corner the market & resell at higher prices on ebay/stockx.



Image source: https://www.techspot.com/news/88446-scalpers-sold-over-53000-new-nvidiaamd-cards-worth.html

Market inefficiencies created by scalpers (resellers) negatively impact the bottom line of gamers and GPU miners.

While practices such as scalping concert tickets is illegal in some US states. There isn't a federal mandate which regulates broadscale scalping practices that destroy market efficiency.

Dare I say we might need one in this day and age.  

In the absence of regulation, what options are available.

[The Sceptical Chymist]

I've never been a miner and usually would be completely ignorant of a situation like this, but in the past month or so I've done a lot of reading about ETH mining and didn't realize that you could mine it using a GPU.  And the more I read, the more the GPU shortage situation kept getting mentioned, especially cards with >4gb of memory.  I've looked on Newegg and invariably all of their gaming graphics cards are sold out.

Not too long ago I bought a new computer that came with an RTX 3080, and I didn't realize how sought after those graphics cards are, so I consider myself lucky to have one.  Now as far as the scalping goes....that comes with capitalism, plain and simple.  It's an ugly practice, but as far as GPUs are concerned it isn't illegal (nor do I think it should be).  I don't mind that places like Newegg limit the number of specific cards you can buy from them, but I'm all in favor of free markets.  And free markets aren't always nice and fluffy; sometimes there's ruthlessness involved and usually greed as well.  Think of all the old oil wildcatters, the railroad barons, and so many other instances of free markets screwing people over--but I wouldn't have it any other way.

[stompix]

While practices such as scalping concert tickets is illegal in some US states. There isn't a federal mandate which regulates broadscale scalping practices that destroy market efficiency.
Dare I say we might need one in this day and age.  

We should bring back rationing and the credit system.
Are you a taxpayer with no conviction and a member of the party, you can buy 2 cards with 12 GB.
Are you unemployed, not paid your yearly tax, and haven't participated in the Victory Day parade, then you're not allowed to buy anything else than a CPU with integrated graphics!
Children who have a test score 33% above the average are allowed to buy cards with up to 8GB, indifferent of the social status of their fammily.

Now the obvious question is, what stops Nvidia once it sees that people are paying a premium to scalpers to rise up prices directly to that bar?
But the tide might turn soon, Etherum going POS is going to hurt more the GPU demand than we could do even if we would hang all scalpers in the public square.

Not too long ago I bought a new computer that came with an RTX 3080, and I didn't realize how sought after those graphics cards are, so I consider myself lucky to have one. 

I don't know why I simply can't think of you as a gamer trying to get as many FPS in a game as the computer can deliver.
Anyhow, yeah, you were lucky (depending on how much you've paid for).

[odolvlobo]

...
In 2015 Martin Shkreli's investment group bought out existing stockpiles of the HIV drug daraprin. Having cornered the market they resold the drug at 4,000 times its previous value. One example of inefficiency present in free markets.
...
Market inefficiencies created by scalpers (resellers) negatively impact the bottom line of gamers and GPU miners.

While practices such as scalping concert tickets is illegal in some US states. There isn't a federal mandate which regulates broadscale scalping practices that destroy market efficiency.

Contrary to what you are claiming, Martin Shkreli exposed an inefficiency in the market by being able to sell the drug at 4000x. He did not create the inefficiency. Scalping is a direct result of a market's inefficiency.

Of course, "efficiency" can be a subjective term. You must first define "efficiency" in order to measure it. In this case, I believe that your measure of efficiency is the degree of alignment with your moral, ethical, and political beliefs. That is not something that anyone can measure very effectively. Economists don't even try.

I think economists generally measure the efficiency of a market more by how evenly the benefit to buyers and sellers are split. In the Martin Shkreli case, obviously the buyers were originally getting a huge discount at the expense of sellers.

[odolvlobo]

Price gouging is another example of the results of a market inefficiency. In this case, it is a lack of liquidity.

Here is an interesting example:

The power went out after a hurricane on the U.S. east coast and food was beginning to spoil. Some enterprising people rented a refrigerated truck, drove a few hundred miles, and bought a load of ice. When they got back, they began selling the ice for a very high price.

People claimed that they were price gouging and called in the government. Price gouging is illegal there, so they had to stop selling the ice. Now, people were unable to buy ice no matter how much they were willing to pay for it. As a result, the ice melted and the food rotted.

In this case, the market inefficiency was caused by government.

[Twentyonepaylots]

Since in these types of purchases you would need some sort of verification for the seller to assist you, the retailers can come up with a KYC system that also keeps track of their purchases and communicates them with other brances of that particular store. We can start with one store, and as soon as their competitors catch wind of this, watch how they will flock upon in creating a system similar or identical to the one I am talking about.

I've never been a miner and usually would be completely ignorant of a situation like this, but in the past month or so I've done a lot of reading about ETH mining and didn't realize that you could mine it using a GPU.  And the more I read, the more the GPU shortage situation kept getting mentioned, especially cards with >4gb of memory.  I've looked on Newegg and invariably all of their gaming graphics cards are sold out.

Not too long ago I bought a new computer that came with an RTX 3080, and I didn't realize how sought after those graphics cards are, so I consider myself lucky to have one.  Now as far as the scalping goes....that comes with capitalism, plain and simple.  It's an ugly practice, but as far as GPUs are concerned it isn't illegal (nor do I think it should be).  I don't mind that places like Newegg limit the number of specific cards you can buy from them, but I'm all in favor of free markets.  And free markets aren't always nice and fluffy; sometimes there's ruthlessness involved and usually greed as well.  Think of all the old oil wildcatters, the railroad barons, and so many other instances of free markets screwing people over--but I wouldn't have it any other way.

Just because the free market isn't known for being altruistic over its customers doesn't mean it has to stay that way. They can easily partake in this war against scalpers if they choose to, but either wouldn't want to or couldn't because of certain limitations.

[zanezane]

Scalpers can easily be destroyed if there is enough GPU in the market in my opinion, their basic idea of scalping is that you will benefit as much as you can when there is scarcity so the only solution for this people and to have them sell at break even or a loss is to introduce a fresh supply and at the same time lower the prices.

[Tytanowy Janusz]

Gpu market with scalpers - gpu available but expensive
Gpu market without scalpers - gpu cheap but unavailable

Price is that high because nvidia is not able to meet the demand and is not going to speed up production because of situation from 2017 when they produced tones of gpus and were left with them for years because bubble burst , eth dumped and The market has been flooded with used graphics cards at super low prices. Covid also don't help with that

[orions.belt19]

We live in a world where capitalism exists so sadly, opportunities like this will bring about scalpers who will grab the rising demand they see. Its sad to see how good GPUs are so hard to come by right now its basically a rip off if you buy one. I pity the gamers or pc users who intend on building a PC then having to deal with overpriced GPUs. I read somewhere that Nvidia intends on creating a dedicated GPU for mining so I hope that when they do, it will solve this competition amongst the miners and gamers.

[Koro-Sensei]

It was NVIDIA fault why they exist after all. Why not produce GPU according to projected sales or last generation total sold. It was NVIDIA's fault knowing that so there are many who would upgrade from last generations GPU plus specially that mining is quite popular now.

[joniboini]

It was NVIDIA fault why they exist after all. Why not produce GPU according to projected sales or last generation total sold. It was NVIDIA's fault knowing that so there are many who would upgrade from last generations GPU plus specially that mining is quite popular now.

Pretty sure the first batch of new hardware is always limited. Plus, the latest tech is hyped so much by various media outlets. AMD, Intel, etc even the car industry is facing a silicon scarcity and has a difficult time producing new chips. The situation might improve in the second half of 2021, but who knows. Just take a look at the Radeon situation, it is worse than this.

Anyway, NVIDIA, AMD, and other companies are looking for profits, so I guess it doesn't matter for them.

[Theb]

I really though the GPU for mining issue would be solved by the recent halving making it unprofitable for GPU mining yet the issue still stands maybe because the new 3000 series makes it possible for them to go higher than breaking even. We won't really have a solution for scalping here as well as there are too many parties involve in it from the manufacturers down to retailers people who already have influence can go directly to them and get all their stocks I know it is pretty crazy that I thought it would only be in fashion industry like shoes but scalping has reached even on gaming because of the new demand it had created outside of the purpose of gaming which is mining out cryptocurrencies and it made true gamers mad because of it.

[Hydrogen]

Contrary to what you are claiming, Martin Shkreli exposed an inefficiency in the market by being able to sell the drug at 4000x. He did not create the inefficiency. Scalping is a direct result of a market's inefficiency.

Martin Shkreli has a lawsuit filed against him for what some are calling a drug monopoly.

What he and scalpers do could be labeled consolidation and centralization of markets. Centralization versus decentralization.

Consolidation and centralization of markets is very common today. It is where much of our systemic inefficiency and abuse stems from.

I really though the GPU for mining issue would be solved by the recent halving making it unprofitable for GPU mining yet the issue still stands maybe because the new 3000 series makes it possible for them to go higher than breaking even.

The greater the price of bitcoin, the more profitable mining becomes.

A jump from 10k to 50k makes mining 5x more profitable. That's without factoring in GPU/ASIC gains from moore's law which could consistently make mining more profitable over time.

[The Sceptical Chymist]

I don't know why I simply can't think of you as a gamer trying to get as many FPS in a game as the computer can deliver.
Anyhow, yeah, you were lucky (depending on how much you've paid for).

I'm not a gamer at all; I bought the computer because I wanted to kick ass in the Folding@Home project in which you tend to do a lot better if you're folding proteins with GPUs.  That's the only thing I used that beast for.  It's incredible to me that right now people are probably paying just for the RTX 3080 what I paid for the entire computer.  Hopefully the GPU shortage improves in the near future, but I don't think things are looking too good.

I really though the GPU for mining issue would be solved by the recent halving making it unprofitable for GPU mining yet the issue still stands maybe because the new 3000 series makes it possible for them to go higher than breaking even.

Plus there's a ton of altcoins you can mine with a GPU that still make it profitable to do so.  Lots of folks are apparently mining Ravencoin as an alternative to ETH. 

[tygeade]

Free market is a capitalist lie to keep the poor people at the bottom and the rich people willing to do unethical and immoral stuff to make money. If the market is free enough, and there is nearly no regulations, people could die and the companies that make money from that would be happy about it.

Look at the example of HIV drug that Martin Shkrelli's group bought, that literally means they want to make money from the misery of others, and this is not like finding some cure and selling it, that is legit business, this buying the whole stock and charging more, meaning they are willing to let some people die for profit. Long story short free market was never something that would mean anything good, it was something that capitalist wealthy people wanted in place and they bribed it into media, into politics and into everything they can get their hands on to make it look like it is a good thing.

[The Sceptical Chymist]

Just because the free market isn't known for being altruistic over its customers doesn't mean it has to stay that way. They can easily partake in this war against scalpers if they choose to, but either wouldn't want to or couldn't because of certain limitations.

I guess my problem is not in what the manufacturers or retailers do when situations like this happen, but the government does.  As long as the government doesn't stick its nose into free market activities, I'm fine with GPU makers or retailers that sell GPUs setting limits or whatever restrictions they see fit. 

I've come to see that the solution probably isn't making more GPUs but finding a way to distribute the news ones fairly.  Unfortunately there's so much demand because of ETH mining (and other altcoins) that people will pay scalpers whatever outrageous price they're asking for high-end GPUs.  It's a shitty situation and I imagine if ETH keeps increasing in value it's only going to get worse.

[Sterbens]

GPU sales are increasingly scarce, exhausted by gamers / miners, they spend almost thousands of dollars for a high-power mining system defense boost regardless of the electricity tax generated in a full month. because the market almost supplies GPUs with a limited base, well there are some versions that are left with standard models even under power capacity.

And to make matters worse, Martin Shkreli didn't take it seriously enough, maybe he already had enough stock for the long term.

[kaya11]

Economists have a tendency to overgeneralize free markets as providing customers with ideal efficiency in producing and dispensing goods and services.

The past 20 years have seemed hellbent on putting notions of free market efficiency through rigorous stress tests.

In 2015 Martin Shkreli's investment group bought out existing stockpiles of the HIV drug daraprin. Having cornered the market they resold the drug at 4,000 times its previous value. One example of inefficiency present in free markets.

In 2021 GPU scalpers (wallstreet investment groups?) following in Martin Shkreli's footsteps bought out more than 53,000 new GPU units, to corner the market & resell at higher prices on ebay/stockx.



Image source: https://www.techspot.com/news/88446-scalpers-sold-over-53000-new-nvidiaamd-cards-worth.html

Market inefficiencies created by scalpers (resellers) negatively impact the bottom line of gamers and GPU miners.

While practices such as scalping concert tickets is illegal in some US states. There isn't a federal mandate which regulates broadscale scalping practices that destroy market efficiency.

Dare I say we might need one in this day and age.  

In the absence of regulation, what options are available.

I really feel sorry for the true gamers out there, I am a small time miner and I am really annoyed at some point with those scalpers. Even though miners feel the same way or even worst towards us miners, because it is we who are the reason of all behind these scalping. Even though prices get high, we insist on buying them as long as we can get our ROI, afterwards we earn passively. Ww don't intend to stop from that, we greed as much as we want, that's human nature, we want more and now it backfired towards us. There's no more to buy in our country, thr ones that are left are either don't have the ability to mine or the price is doubled.