The Impact of Bitcoin on Consumer GPU Prices: An Empirical Investigation

Abstract

The price elasticity with respect to supply for GPUs is an important variable to understand how the GPU market interacts. Bitcoin is a phenomenon that has impacted the GPU market by increasing the demand for GPUs to mine the cryptocurrency. In this paper, I use quarterly data on GPUs from 2010 to 2020 and estimate a price elasticity with respect to supply to be 0.573, though there is imprecision in the estimate due to a low observation count. Using this estimate along with estimates about the quantity of GPUs used for Bitcoin mining, I estimate Bitcoin has cost the GPU market $863M. Previous research has not specifically studied the GPU market although elasticity for products like digital camcorders has been estimated. I use two-stage least squares to omit simultaneity bias in the estimation process.