Financial markets and general news outlets cannot get enough on the wilds swings in cryptocurrency (OTCBB: GBTC). Last week, Bitcoin Investment Trust bottomed below 1,300. It had begun the week of December 18 at $3,500. If the currency’s moves are unpredictable, who ultimately benefits from it? The tech companies benefitting from it are clear: GPU suppliers.
Advanced Micro Devices (NASDAQ: AMD)’s Polaris-based GPUs have a superior algorithm that mines cryptocurrencies, namely Bitcoin. Nvidia (NVDA) entered the market when it said earlier this year that it would develop GPUs that would specifically target this market.
The will prove highly profitable for Nvidia: high GPU prices, driven by crypto-mining, is hurting demand for consumers. GPU prices do not necessarily translate to higher profits when retailers absorb the benefits of the high prices.
Risks
The short-term benefits of crypto mining will fade over time: ASICs, or hardware designed specifically to mine, will put pressure on demand for both AMD and NVDA GPU hardware.
Takeaway
AMD may enjoy abnormally high demand for its RX Vega 64 card, due to the efficient mining while running only 130W in total power draw. In the medium term, AMD must improve its GPU drivers to optimize the price to performance. That would give demand for the Vega-based cards a lift.
Disclosure: Author owns shares of AMD.
