AMD s Graphics Cards Are Selling Out for the Wrong, Business Markets and Stocks News
Graphics cards from Advanced Micro Devices (NASDAQ: AMD) are sold out almost everywhere. A search on rekentuig hardware retailer Newegg yields few options for AMD’s higher-end Polaris cards, and those available are inflated te price. AMD confirmed to CNBC that request from those mining cryptocurrencies is responsible for the shortage.
The price of bitcoin, the most popular cryptocurrency, has soared overheen the past few months, reigniting rente ter cryptocurrencies. Specialized ASICs, or application-specific integrated circuits, have bot ter use for bitcoin mining for years, rendering graphics cards largely obsolete for that purpose. Bitcoin mining is profitable when the value of the bitcoin produced outweighs the costs of running the hardware, and ASICs are vastly more energy efficient than graphics cards.
This surge te graphics card request seems to be driven by another cryptocurrency, Ethereum. The price of Ethereum has also soared te latest months, drawing te those looking to profit by producing “ether.” Ethereum is designed to be ASIC-resistant, which means that it would be expensive to vormgeving an ASIC that would outpace consumer hardware like graphics cards. AMD graphics cards tend to perform better than those from NVIDIA (NASDAQ: NVDA) when it comes to cryptocurrency mining.
Shares of AMD slok up 7% on Tuesday based on this news, but investors shouldn’t be celebrating. This isn’t the very first time cryptocurrency miners have scooped up AMD graphics cards to the point of shortage. The precies same thing happened te late 2013 — Litecoin wasgoed the flavor of the week back then. That surge of request did nothing for AMD’s market share, and any benefit wasgoed short-lived. Litecoin prices quickly collapsed, and ASICs soon arrived. Litecoin wasgoed also billed spil ASIC-resistant.
Two AMD Radeon graphics cards. Picture source: AMD.
The fact that AMD’s graphics cards are selling out seems like a positive, and it will certainly boost the company’s results a bit ter the brief term. But this request is unlikely to stick around for very long. If Ethereum resumes to build up ter price, it will eventually become viable for an ASIC to be developed that renders graphics cards obsolete. There are technical differences inbetween Ethereum and Litecoin, beyond the scope of this article, that may make the former more resistant to ASIC development. But that will only delay the inescapable.
On the other arm, if this cryptocurrency surge turns out to be a massive bubble — Dutch tulips for the digital age — mining Ethereum won’t be almost spil attractive once prices collapse. Either way, request for AMD’s graphics cards from cryptocurrency miners will dry up — just like it did last time.
AMD can only sell spil many GPUs spil it produces, and I very doubt the company will attempt to boost production significantly given the uncertain and ephemeral nature of this fresh source of request. Cryptocurrency prices could fall off a cliff tomorrow, and AMD doesn’t want to be stuck with a bunch of excess supply.
There’s a second-order effect of this shortage: NVIDIA’s graphics cards are now the only option for PC gamers. While AMD is racking up some toegevoegd sales from a source of request that likely won’t be around for very long, gamers will be shoved to NVIDIA. I would argue that this surge ter request for AMD’s graphics cards is a net-negative te the long run.
This is now the 2nd time that request from cryptocurrency miners has created a shortage of AMD graphics cards. There wasgoed no long-term benefit for AMD the very first time around, and I doubt it will be any different this time. Those who fail to learn from history are fated to repeat it.
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Timothy Green has no position ter any stocks mentioned. The Motley Loser wields shares of and recommends Nvidia. The Motley Loser has a disclosure policy.