CNBC’s U.S. investment commentator Jim Cramer, who in the past stated that bitcoin could hit $1 million thanks to companies stockpiling the cryptocurrency to pay off ransomware, recently stated that investors shouldn’t buy Nvidia and AMD shares becuase of the cryptocurrency mining trend. The TV commentator claimed cryptocurrency growth isn’t currently sustainable and loathed bitcoin and ethereum for boosting these companies’ stocks due to an increase in demand.
CNBC’s article cites the incredible growth both bitcoin and ethereum had in the last 12 months. According to data from CoinMarketCap, on June 24, 2016, one bitcoin was worth about $650, while now it’s at $2,682.65. Ethereum, on the other hand, went from about $14.1 to a whopping $334.79, at press time.
As reported by CCN.com, these currencies’ price boom led to a shortage of AMD and Nvidia GPUs earlier this month, as new small-scale cryptocurrency mining operations have been surging, according to AMD.
The growing cryptocurrency mining market, according to a report from RBC Capital Markets, has contributed $100 million worth of GPU sales for Nvidia alone, in the past 11 days. The report added that AMD chips are the best for mining Ethereum, which hints that AMD’s sales numbers are probably more impressive.
These sales helped investors get in on the Nvidia / AMD craze, so much so that both companies recently saw their value surge. AMD, a manufacturer whose GPU chips are usually cheaper than those of Nvidia, saw its shares soar by 33 percent in the last 30 days.
Nvidia, likely due to the higher price of its units, saw its shares rise by 15 percent in the last 30 days – which is still impressive.
Earlier this month, demand was so high these GPUs were sold out at major US retailers and, as such, vendors who id sell them did so at an inflated price. Nevertheless, even though Jim Cramer disapproves of investors buying AMD or Nvidia shares because of the cryptocurrency mining trend, he stated that buying Nvidia and AMD shares for their role in areas such as gaming, artificial intelligence, or autonomous cars makes sense. He stated:
You play Nvidia for artificial intelligence, for GPUs, for autonomous cars, and for gaming. You play AMD for gaming and they have a faster chip than Intel.
Back in 2013, when both bitcoin and litecoin miners started driving demand, there was a similar GPU chip shortage in the market caused by the huge demand. This time, responding to miners’ needs, and given this wasn’t the first time these companies saw a similar swell in demand, both Nvidia and AMD started creating cheaper, stripped-down versions of their graphics cards, even though both hardware manufacturers still see the gaming market as a priority.
The GPUs specifically designed for cryptocurrency mining were to be released at a lower cost when compared to gaming GPUs, due to their lower specifications. According to reports, manufacturers removed display ports, and reduced their warranty to 90 days due to the intensive 24-hour operations these graphics cards are likely to face.
As far as mining goes, one analyst, who compared Nvidia and AMD GPUs, for bitcoin and ethereum mining stated:
In a small-scale environment (mining Ethereum) the profitability is higher given that the Network rate is materially lower at ~38K GH/s when compared to Bitcoin at 4.858 billion GH/s.
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