Has Bitcoin made your laptop more expensive?

Published by Ben Sledge on

We all know what a Bitcoin is, right? It’s that somewhat ethereal and slightly confusing currency that was involved in every news story for that strange period around Christmas 2017 when nothing seemed quite real. The cryptocurrency kicked up such a fuss that people began searching through landfill for hard drives with their bitcoin on when its notoriously unpredictable value shot through the roof, reaching highs of nearly $20,000 (over £15,000) per Bitcoin. Whether you’ve invested or not, you could be feeling the effects of the cryptopopularity in your tech purchases.

To understand why the price of that laptop on your Christmas list has gone up, first you’ve got to understand how you actually get a Bitcoin. Other than from trading it with someone for goods or services much like any “real” currency, that is, to most of us it seemed that Bitcoin just sort of appeared out of the internet’s general aether.

In reality, Bitcoin, or BTC, was released in early 2009 by someone known only by the pseudonym Satoshi Nakamoto, and to get hold of some, you can “mine” it. Mining for Bitcoin has essentially the same principles as mining for gold, coal, or dinosaur DNA trapped in amber-fied mosquito bellies — the more times you swing your pickaxe at the rock face, the more chance you have of striking lucky.

The big and obvious difference is that instead of swinging an axe at a wall, your computer does all the manual labour by solving complex algorithms. The more algorithms your computer solves, the better chance you have at winning the prize pot. And the more algorithms solved worldwide, the more difficult it is for hackers to steal your Bitcoin or compromise the currency.

Every ten minute “block” that you spend mining gives you a chance to win the prize, originally 50 BTC, but due to the prize halving every 210,000 blocks (about once every four years), the prize is now a mere 12.5 BTC (current value nearly $92,000, or just over £70,000).

And this is where it starts affecting you and me, who have never mined anything in our lives, and probably never will.

Prices of graphics processors, or GPUs, have risen steadily since the boom in popularity for mining Bitcoin and other cryptocurrencies. The processors themselves are incredibly useful for solving the complicated algorithms that are necessary to mine Bitcoin, so miners worldwide are scooping them up for their mining rigs.

Take the NVIDIA GeForce GTX 1070 for example. It was released at £329 in the UK, or $379 in the US. This graphics card was released as an affordable, yet powerful addition to your computer set-up, and could handle even the most graphics-intensive videogames on the highest settings.

However, at some point in the one and a half months between December 24th 2017 and February 4th 2018, something happened that caused it to quadruple in price.


Its anomalous low price on December 24th was likely due to a pre-Christmas sale on Amazon, but the steady incline to be valued at £977.25 (nearly three times its RRP on release) over such a short period of time following the dramatic rise in the price of Bitcoin is a correlation that can’t be ignored.

People caught onto the potential for investment in Bitcoin, and the gold rush that followed meant that GPUs were scarce, driving prices up as stocks dwindled. Demand was still high, so naturally prices were too. It’s likely that the same happened in San Francisco in 1849, the prices of pickaxes and goldpans surely skyrocketed as more people tried to find their fortunes in the mines. Pickaxe salesmen were probably the overlooked millionaires of the time.

Following the dissolution of the Bitcoin “craze” and the simultaneous price of the currency dropping, prices of GPUs have also dropped again, but at a significantly higher price.

The GTX 1070 has settled at approximately the £480 mark, around 45% higher than its price at launch. This has a knock on effect on the prices of computers everywhere, no matter if you want a kitted out gaming PC, or a laptop that runs Microsoft PowerPoint. The price hikes and lack of availability of the best GPUs, like the GTX 1070, causes people to look to mid-range options for a better deal with slightly worse performance. The increased demand for mid-tier GPUs therefore increases their prices, and the prices of ready built computers that already incorporate them.

Bitcoin is now worth £5,656.44 ($7,351.75), and people continue to mine it. However, more and more people have seen the value of using Bitcoin’s open source software to create their own cryptocurrency, each with its own unique characteristics. While Bitcoin remains the market leader, currencies such as Ethereum, Ripple and Litecoin are also gaining popularity, and saturating the market with more options for potential miners.

What next? Expect processor prices to remain similar to what they are now for the foreseeable future, but with any major fluctuations in the value of big name cryptocurrencies could always shake things up for better or for worse.

It is probably best to keep an eye on the second hand market, as most GPUs should last at least five years, and unsuccessful miners will be looking to recuperate some of their costs by selling on their units.

Many people jumped on the Bitcoin bandwagon in the past year, and most of them will have ultimately been unsuccessful, but rather than emerging from the mines with a measly salary and black lung disease, they’ve only lost their pride, free time, and a small investment in computer parts.

All prices and exchange rates are correct as of 03/08/2018.


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