AMD ‘could be devastated’ by Mining

February 22, 2014 21:31 UTC
AMD Radeon is driving mining

In an article published today, Daily Finance argues that cryptocurrency mining may be hampering development at AMD.

The AMD flagship graphics card, Radeon R9 290X, is a hard-to-find commodity out there. Online retailers such as NewEgg and Amazon either list it as ‘Out of Stock’ or ‘Special Order’. Trying to find any half-decent AMD graphics card at a Bitcoin-centric retailer is futile. They’re just not available – and when one is for sale – it is priced at a premium.

Everyone knows: these pieces of high-grade technology are the heart of the best – and most profitable – home-built mining rigs. This would also seem especially true in the light of AMD and Hynix’s upcoming 3D HBM offering with AMD Pirate Island.

So, if their high-end graphics products are so sought after, how can this possibly be to the detriment of AMD?

Consider that the R9 290x was developed as a PC gaming card, specifically introduced into the market to compete with NVIDIA’s Geforce GTX780. However, cryptocurrency miners found that the R9 has excellent hashing performance and bought it up en masse. NVIDIA cards, for various reasons, do not compare well with equivalent AMD products and chip-for-chip, the AMD will always out-perform its rival.

Instead of the R9 fulfilling its role as competition to the Geforce GTX780, it was diverted into a new, unintended market as mining rig GPU. PC gamers, unable to find the R9 in the market opted for the next best thing, namely the Geforce, and NVIDIA retained dominance in the gaming ecosystem.

AMD Radeon R9 290x with water cooling

Clash of the Titans

Nvidia and AMD, the two dominant players in the gaming market, have been locked in a strategic battle for market dominance. AMD’s Mantle API was supposed to be pervasive amongst gamers – had the R9 fulfilled its function of showcasing the new Mantle system, and it’s SDK. Dominance of gaming, on both the gamer PC and the game designer fronts, would have secured AMD’s market share for several years.

NVIDIA’s strategy is different and more far-reaching. NVIDIA is targeting the phenomenon whereby gamers tend to change cards a lot yet stick with the same monitor for years. G-Sync is a proprietary architecture whereby next generation NVIDIA cards will depend upon – yet enhance – NVIDIA G-Sync technology embedded in the monitor. By locking the gamer in via the monitor, NVIDIA hopes to secure its market share for longer.

The rapid rise of mining and the co-incidental suitability of AMD’s GPU products for the task have derailed their strategy in the gaming race. PC gamers, whom either cannot find or cannot afford, the R9 are diverted to the Geforce and AMD is left with a hugely invested market strategy gone wrong. Shareholders have to be calmed and informed, and somehow AMD must find a way to turn this setback into an opportunity.

Will they opt to rejoin the gaming race, having fallen behind a lap? Or will they choose to change their game and get in the mining rink with ASICs?

Given the daily escalation of mining difficulty, time is of the essence, and AMD will have to decide quickly in which pool to seek it’s fortunes.

The ASIC Invasion

To further complicate matters, there is the imminent threat of scrypt ASICs flooding the mining market. Although some believe that the scrypt ASIC boom will devastate the GPU market, the opposite is true. There are several altcoins positioning in a new market niche preparing for the forced migration of GPU rigs. Coins such as Vertcoin and rising star Execoin will have them productively employed. The Execoin developers spoke to CCN about the ASIC threat and it’s implications for the mining sector.

Given this new market dynamic, it appears that even if AMD doesn’t want the mining market, the mining market just won’t let AMD go.

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Last modified: March 24, 2014 12:39 UTC

@venzen

Market analyst and Open source developer with a keen interest in blockchain technology, consensus mechanisms and the decentralizing effect. He has found a solution to the PKI mechanism. Email me to discuss.

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