[2018-03-02] AMD: GPU Business Could Take Hit If Crypto Miners Stop Buying

[TYPEcoin]

A drop in demand for graphics cards (GPUs) by the world's cryptocurrency miners could 'materially' impact AMD's chip business, the company disclosed this week.

In its most recent 10-K annual filing, AMD - one of several firms to ride the recent wave of demand for GPUs (which are needed for the energy-intensive mining process) - highlighted how "the rise of cryptocurrency prices and the introduction of new cryptocurrencies created a demand for our GPUs in 2017." While the company offered no specific figures, the disclosure, published on Feb. 27, is in line with past predictions from AMD, which suggested near the end of 2017 that its GPU business was getting a lift thanks to crypto-miners.

That state of play might not last forever, however.

In the 10-K, AMD indicated that several factors could change the environment on the GPU front, highlighting market and regulatory risks that could lead to a decline in the number of GPUs being bought by cryptocurrency miners.

The firm wrote:

"The cryptocurrency market is unstable and demand could change quickly. For example, China and South Korea have recently instituted restrictions on cryptocurrency trading. If we are unable to manage the risks related to a decrease in the demand for cryptocurrency mining, our GPU business could be materially adversely affected."

The prediction that volatility could alter the pace of demand is shared by others in the space, including rival GPU maker Nvidia.

During an earnings call in early February, Colette Kress, Nvidia's chief financial officer, said it was "hard to quantify" how much of its GPU revenue came from cryptocurrency miners, adding that "cryptocurrency trends are likely to remain volatile."

Still, the inclusion in its most recent filing serves to highlight how AMD is among a growing list of companies - primarily financial institutions - to acknowledge the impact that cryptocurrencies and blockchain technology will have on their bottom lines.

https://www.coindesk.com/amd-gpu-cryptocurrency-miners-hit/

[cr1776]

This seems like a completely obvious article:  drop in demand could materially impact AMD's chip business.  I guess AMD has to do it in the 10-K, but still, is it really something that was newsworthy?  ;-)

[Pitmains]

This seems like a completely obvious article:  drop in demand could materially impact AMD's chip business.  I guess AMD has to do it in the 10-K, but still, is it really something that was newsworthy?  ;-)

AMD can pump the altcoin so that the demand for its GPU can be high.

[1Referee]

AMD can pump the altcoin so that the demand for its GPU can be high.

Could be, but there is no reason for that. If Bitcoin keeps increasing, altcoins will increase as well, even if their BTC ratio doesn't increase at all. If you look at the last year, then that's exactly what happened. Altcoins even though they haven't managed to reach their previous all time high based on their BTC ratio, they easily managed to reach all time highs based on their USD value, and that's the only thing that matters for miners. AMD is a slow performer anyway, even with how crypto has boomed massively in the last year(s).

AMD stock price early January 2016 below $3, and currently $11.73. Increase ~300%
Nvidia stock price early January 2016 $33, and currently $229. Increase ~600%

[gentlemand]

Surely by this point there's so much pent up demand from priced out gamers that the GPU manufacturers would barely notice the end of GPU mining. All you see on gaming forums these days is wailing about the expense. And it's not the manufacturers who get the premiums. It's the dealers.

I wonder how this situation will ever resolve. It's not as if mining will ever go away. It's only going to grow from now on. Even if the current crop of coins die off there'll be new ones waiting to take their place.

[richardsNY]

I wonder how this situation will ever resolve. It's not as if mining will ever go away. It's only going to grow from now on.

There is not much that can be done against this level of progression in the mining industry. It's going to be a situation that results in solar energy equipment to become more expensive, regular energy, the various metals needed to build GPU's, motherboards, etc. Miners won't feel anything of the increasing resources prices. It's the regular people and businesses that will be affected by this, which to a certain extent makes me feel sorry for them. It was last year where one of my relatives was talking about how GPU's have become so much more expensive, and that it also affected the second hand market. He believed that it was due to the increasing popularity of PC gaming, where I then explained the actual reason for the inflated prices. I wouldn't classify him as a gamer, but he was looking to build a new system, and paid the price for it.

[Yaunfitda]

They have been in the chip industry for a long time and now they are bitching about that they can be severely affected by crypto's? Demand is huge they ride the wave already I don't think they should complain how crypto brought a lot of money to them. Are they afraid that regulations will slow their business down?

They challenged Intel in the beginning of this millennial and was able to garner quite a good percentage from them and now they are afraid that a sudden change of air will make them suffer?  

They are in a cut throat business and I know they can mitigate risk, similar to what Intel did when they challenged them for supremacy in the manufacturing and semicon industry.

[dbers79]

With the projected rise of cryptocurrency use all over the world, the demand for mining equipment is expected to rise as well. If AMD's products are noncompetitive, miners would stop buying for sure. Miners, should they stop buying AMD rigs would only do so because some other player offers a better product compared to what they offer.

[gentlemand]

With the projected rise of cryptocurrency use all over the world, the demand for mining equipment is expected to rise as well. If AMD's products are noncompetitive, miners would stop buying for sure. Miners, should they stop buying AMD rigs would only do so because some other player offers a better product compared to what they offer.

If AMD comes out with something that's useless for mining compared to Nvidia then they will pick up all of the business of priced out gamers. Sounds like a win win for them. They may right now be developing something that's genuinely awful for mining in the hope of being dropped by miners.

[laurenB7742]

With the projected rise of cryptocurrency use all over the world, the demand for mining equipment is expected to rise as well. If AMD's products are noncompetitive, miners would stop buying for sure. Miners, should they stop buying AMD rigs would only do so because some other player offers a better product compared to what they offer.

If AMD comes out with something that's useless for mining compared to Nvidia then they will pick up all of the business of priced out gamers. Sounds like a win win for them. They may right now be developing something that's genuinely awful for mining in the hope of being dropped by miners.

But is it possible that a GPU would be good for gaming and video editing, while useless for mining? I don't know much about technology and algorithms but I imagine mining power and gaming power are similar.

[gentlemand]

But is it possible that a GPU would be good for gaming and video editing, while useless for mining? I don't know much about technology and algorithms but I imagine mining power and gaming power are similar.

Almost certainly not but I'm sure they'd love to come up with something like that. I wonder if they launched something purposefully weaker than the equivalent Nvidia and told gamers it was an attempt to deter miners whether they'd be impressed or appalled.

[squatter]

A drop in demand for graphics cards (GPUs) by the world's cryptocurrency miners could 'materially' impact AMD's chip business, the company disclosed this week.

Understatement of the century. Look at an AMD price chart for the past few years. Better yet, look at NVDA! Obviously, cryptocurrency mining materially impacted the sector on the way up -- sales growth has been phenomenal, with resellers consistently cleaning out GPU manufacturers as soon as cards hit the market.

If the market takes a dive, we should expect to see that demand dry up. NVDA looks like a bubble chart, much like BTC in 2013. Investors should be careful not to get too complacent with their paper profits.

[hatshepsut93]

A drop in demand for graphics cards (GPUs) by the world's cryptocurrency miners could 'materially' impact AMD's chip business, the company disclosed this week.

Understatement of the century. Look at an AMD price chart for the past few years. Better yet, look at NVDA! Obviously, cryptocurrency mining materially impacted the sector on the way up -- sales growth has been phenomenal, with resellers consistently cleaning out GPU manufacturers as soon as cards hit the market.

If the market takes a dive, we should expect to see that demand dry up. NVDA looks like a bubble chart, much like BTC in 2013. Investors should be careful not to get too complacent with their paper profits.

It's not necessarily 100% caused by cryptocurrency mining, there are a lot of other factors that have boosted both companies: PC gaming became more popular in recent years, GPU's are used for machine learning, neural networks, data science and in other fields, AMD had released a new generation of CPU's. I remember that in last year they were saying that they dont focus on mining in long term, because cryptocurrencies are too risky, and in retrospective I don't think they were wrong, even if they missed out on some big profits, because altcoins can still crash, as most of them are totally useless, and with this crash the demand for GPU's will drop too.