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‘Adversely Affected’: AMD Worries Crypto Miners’ GPU Demand Could Fall

Last Updated March 4, 2021 5:05 PM
Josiah Wilmoth
Last Updated March 4, 2021 5:05 PM

AMD has warned that reduced demand from cryptocurrency miners could “adversely” affect the firm’s GPU business.

The company — who along with Nvidia dominates the GPU manufacturing industry — disclosed in an annual report  dated Feb. 27 that the dramatic growth of the cryptocurrency mining industry had a material impact on AMD’s revenue during the fiscal year.

From the filing:

“We believe that the rise of cryptocurrency prices and introduction of new cryptocurrencies created a demand for our GPUs in 2017. The cryptocurrency market has existed for several years and their prices and popularity increased in 2017. The mining operation of cryptocurrencies are typically performed using specifically designed application-specific integrated circuits (ASICs); however, the introduction of new cryptocurrencies (e.g. Ethereum) have made mining on GPUs more efficient, providing a higher rate of return for the end user.”

AMD did not provide figures detailing the impact of cryptocurrency mining, but recently-released earnings reports  reveal that may have been quite pronounced.

AMD’s share of the GPU market rose to 33.7 percent from 27.2 percent during the fourth quarter, while Nvidia’s dropped 72.8 percent to 66.3 percent, which John Peddie Research attributed partially to the fact that AMD was the primary benefactor of the $776 million worth of GPUs that miners purchased in 2017.

This increased demand caused revenues to soar, but it did not come without its own difficulties. Chipmakers struggled to keep pace with demand, leading to production bottlenecks and skyrocketing prices on the secondary market. Inability to get their hands’ on the latest chip models often left gamers livid, and SETI researchers even complained that cryptocurrency miners were hindering the search for extraterrestrial life.

Moreover, increased demand from cryptocurrency miners has presented AMD and — to a lesser extent — Nvidia with new business risks, as well. Demand from miners is less stable than gamers or other industries that utilize GPUs, which is likely why Nvidia has committed to favoring gamers over cryptocurrency miners when supplies are limited.

Consequently, fluctuating cryptocurrency prices — as well as regulations hostile to the industry — could cause the GPU market to be “materially adversely affected,” though this would most likely affect AMD to a much greater degree than Nvidia.

“The cryptocurrency market is unstable and demand could change quickly. For example, China and South Korea have recently instituted restrictions on cryptocurrency trading,” AMD concluded. “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.”

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