Nvidia Corporation (NVDA) and Advanced Micro Devices, Inc. (AMD) could potentially suffer falling sales of graphics processing units (GPUs) used to mine cryptocurrencies if smaller rival Bitmain Technologies Ltd. produces a new chip specifically designed for this purpose, RBC Capital analyst Mitch Steves wrote in a recent report, according to Barron's. (For more, see also: AMD and Nvidia, Bitcoin Fears Maybe Overblown.)
Changing Market Conditions
While such a specialized chip failed to materialize before, both the market and the available technology have changed since then, said Steves, Barron's reported. The price of ether, one of the largest cryptocurrencies by market capitalization, has skyrocketed over the last year. As ether's price has risen, demand for GPUs has climbed, according to a Morgan Stanley report recently covered by Investopedia.
Nvidia's stock has surged recently, climbing roughly 21% year-to-date (YTD) and close to 120% over the last year, according to data compiled by Investopedia. Advanced Micro Devices has enjoyed some upside this year, rising approximately 6.7% YTD, but falling nearly 18% over the last year. (For more, see also: NVIDIA, AMD Up From Ether Mining: Morgan Stanley.)
'More Efficient' Chips
Should Bitmain create a new chip, it could steal the thunder of both companies, emphasized Steves, according to Barron's. "If a new chip is made by Bitmain to address this market, and the specs are correct for the 'F3' product, we think it would take crypto demand away for both AMD and NVDA as the chips would be significantly more efficient," he wrote.