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Microchip shortage is leading to profit for scalpers and headaches for gamers

Graphics processing units are selling for more than double normal pricing

14-year-old Eric Zhu has been going to his local computer store everyday after school to try once again, buy a piece of computer hardware: a graphics processing unit, or GPU. He needs to update this common component that allows a computer to display graphics so that he can play a new game called Valorant. He has been saving up for months for a high end GPU that can cost as much as $1500. But every day, when he gets to the store, the employees tell him the same thing: we are out of stock.

COVID-19 has hit the world hard with shortages in every industry but the tech industry was hit especially hard. Microchips used in Graphics Processing Units have been in a major shortage around the globe, causing a shortage in GPUs. Scalpers have taken advantage of this shortage–and the high demand for GPU due to crypto mining–to make a major profit, using automated computer software they are able to get their hands on multiple GPUs, then reselling them at inflated prices.

GPUs have been reselling for over double the manufacturer’s suggested retail price on the secondary market. This includes places like Ebay, Facebook Marketplace, Amazon, and StockX

A major factor in the high demand for GPUs are their use in cryptocurrency mining.

Crypto mining is when a GPU is used to solve thousands of highly complex math equations that are then used to verify crypto transactions on the block chain. The block chain is a digital ledger where all crypto transactions are stored and saved. The most commonly mined cryptocurrencies are Bitcoin and Ethereum. 

Many people have set up crypto mining “rigs” where they have multiple GPUs setup with the sole purpose of mining crypto 24/7. These “rigs” use a ton of energy which is expensive and very bad for the environment, but miners end up profiting multiple times over their costs. 

“Me and my dad invested in crypto currencies and we ended up expanding out into crypto mining with GPUs around 6 months ago,” Ontario based crypto miner Inigo told 8forty. Inigo currently has a GPU mining rig with 7 GPUs. 

Inigo was able to get his hands on these GPUs because his father works nearby a local computer shop. “He would visit the shop every lunch break he has,” Inigo said. 

But the crypto miner also purchased from scalpers. Inigo’s mining setup cost him roughly $10,000 CAD, but despite the high cost, it has been a worthwhile investment. “Recently because of the crypto market downfall, the overall daily earnings is about $60 CAD and I’m on track to pay off the rig in about a month and a half” 

Scalpers have been using automated computer software, or “bots,” to purchase multiple GPUs for retail price while others are left empty handed. The most common and well known software is OminousAIO which can be purchased for $4000 USD. It is a computer software that emulates human activity and can purchase multiple items from sites where an everyday person would only be able to purchase at most one. 

On OminousAIO you are able to run “tasks.” Each task is essentially one person going for a specific item that you have it set up for. The people that use OminousAIO are able to run thousands of tasks which is equivalent to thousands of people trying to purchase the item. 

Marc Chung, a 15 year old high school student. has been using OminousAIO for a few months and has been purchasing multiple GPUs for reselling, netting him $7000 in profit. When asked if he feels that what he is doing is ethical Marc stated, “I believe it’s ethical – fundamentals of arbitrage/supply and demand.” 

Chung initially went for GPUs manually and described the experience as “strenuous.” Now Marc is able to make purchases while he is asleep.

Most of the time when GPU restocks occur the average consumer has no idea that they restocked. Scalpers address this issue using “cook groups.” A cook group is a group with hundreds of people on Discord that have scripts that are constantly refreshing retailer sites in order to know right when an item restocks. 

One of the most well known scalper groups is called The North Cop, also known as TNC. This group costs members $40 every month and offers alerts for restocks on sites such as Walmart, Bestbuy, Amazon, and many others. 

A member of TNC, told 8forty about how he got into reselling GPUs. 

“I got into TNC from a friend telling me about their monitors and how he always knows when there is a restock,” said Oscar Chong, one of TNC’s 1800 members. But with that many scalpers there is plenty of competition in the game. 

“It is not as easy as it seems, there are lots of expenses and time that goes into this. People always talk about how easy it is when it really isn’t.”

Oscar Chong said “If the companies truly cared they would make more GPUs or find a better way to get them into gamers’ hands!”

Cover Image: Anik Hett

1 comment on “Microchip shortage is leading to profit for scalpers and headaches for gamers

  1. Pingback: The capabilities I have demonstrated through my work in New Media Lab – Crash Vancouver's Vlog

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