Advanced Micro Devices, Inc. (AMD), the well-known technology company recognized for the production of processors, motherboards, and GPUs, among many other products, has been able to become NVIDIA’s leading competitor in the graphics card industry. This business strategy has led them to a prosperous streak that has not only increased the value of their shares but also their acceptance within the IT community.
One of the company’s strong points has been its massive adoption in the world of crypto mining, a move that has raised both the sales and prices of graphics cards to the point that has become virtually uncontrollable. In the past few months, both AMD and NVIDIA have gone to the extremes of asking vendors to take gamers into account when selling them their cards, as mining had depleted the stock. Not only that, they even affected other strong technology initiatives. At one point SETI went so far as to warn people that the lack of GPUs could extinguish their operations for extraterrestrial life searching.
However, this accelerated selling could soon come to an end as rumors of Bitmain’s production of an Ethereum ASIC have been confirmed by Susquehanna analyst Christopher Rolland. According to information from CNBC, in a letter addressed to his clients, Mr. Rolland mentioned he was sure about the future commercialization of this technology, which could affect the company’s income in the near future:
“During our travels through Asia last week, we confirmed that Bitmain has already developed an ASIC [application-specific integrated circuit] for mining Ethereum, and is readying the supply chain for shipments in 2Q18, (…) while Bitmain is likely to be the largest ASIC vendor (currently 70-80% of Bitcoin mining ASICs) and the first to market with this product, we have learned of at least three other companies working on Ethereum ASICs, all at various stages of development.”
If his impressions are correct, the placement of Ethereum’s ASICs in the market could lead to a massive migration of miners towards the acquisition of this pieces of equipment, making a rig mining operation unprofitable. ASICs perform many more operations per second, so they can “mine” a block much faster, but until now it has not been possible to develop an ASIC for Ethereum due to the design of its algorithm.
Bitmain continues to be a reference in the world of mining. In addition to being the leading ASIC vendors at present, they have also put into circulation miners of algorithms that were initially designed to resist ASICs: Besides Ethereum’s miners, there is also the development of an ASIC capable of working with CryptoNight algorithms.
This announcement served as a motive to led the Monero team (the most important crypto based on this algorithm) to announce a biannual update scheme to resist the advances in hardware from companies like Bitmain.
An analysis of AMD’s share prices using Heikin Ashi’s candles shows the strong bearish trend this company has had in the last week. Susquehanna’s analyst downgraded AMD’s rating from Neutral to Negative:
However, even though Nvidia will also see its sales affected, the analyst mentioned that the changes would not be so marked as “Nvidia has a stronger and more durable gaming franchise which would help it work through this potential Ethereum-related unwind,” For this reason, Nvidia’s rating remained neutral.
The same analysis of AMD’s competitor’s behavior shows that it has been more solid despite a sharp decline in recent hours:
The company, however, issued a statement in which they deny that their success depends exclusively on cryptomining. One of the arguments used by Susquehanna to lower AMD’s rating and maintain Nvidia’s rating:
“Yesterday a report was published on AMD which hypothesized very high revenue for Ethereum-related GPU sales. As a reminder, on our Q4’17 earnings conference call we stated that the percentage of annual revenue related to Blockchain was approximately mid-single digit percentage in 2017. We had significant growth in the GPU business outside of Blockchain in Q4’17 as we ramped our Radeon Vega products, our GPU compute products, and our Apple business. We also spoke about strength across the rest of our business with AMD Ryzen and AMD EPYC product momentum. We have very compelling long-term drivers for the company including PCs, servers and graphics and our Q1 2018 financial guidance reflects that.
We appreciate the time and attention that investors continue to pay to Blockchain and cryptocurrency, but would also like to keep it in perspective with the multiple other growth opportunities ahead for AMD.”
Nevertheless, they continue to take miners into account, and just as last year they launched the Crimson ReLive Edition Beta for Blockchain Compute Software, a few hours ago they announced a driver that would improve the performance of their GPUs when used to mine cryptos: The Adrenalin Software Edition 18.3.4.
Even though AMD has been active and has responded to Susquehanna’s views, Nvidia has not issued any official comment on the matter.
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