Ethereum price hikes are pushing the value of Nvidia, according to analyst Mitch Steeves of RBC Capital. Steeves claims higher Ethereum prices will increase the use of Nvidia GPUs for mining. On Monday, Nvdia shares were up by $1.67, or 0.8%, at $216.60.
Steeves, who has given Nvidia an “outperform” rating, said the payback period of cryptocurrencies has fallen as the prices have risen. The price increases include Ethereum, Monero, Zcash and bitcoin.
Buttressed by a record-setting bitcoin price rally, the total crypto market cap last week crossed the $300 billion threshold for the first time — making the combined capitalization of all cryptocurrencies more valuable than Bank of America. The altcoin markets have more or less caught bitcoin’s tailwind, enabling many other cryptocurrencies to reach historic milestones of their own.
Ethereum’s payback period now stands at around 5.6 months compared to 9.4 months prior to the rise, Steeves said, as revealed by Barron’s. Such drops in the payback period boost the use of GPUs for mining and could result in continued strength for GPU sales.
He attributed cryptocurrency price increases to institutional investing, at least in part.
Steeves called the issue a multi-faceted question, but investors are recognizing cryptocurrencies’ value. He expects to see more institutional investment and investment from high net worth individuals.
Meanwhile, cryptocurrency technology continues to progress at a rapid pace.
Bitcoin’s Lightning Network has also made progress, Steeves said, while the software development team works on ring signatures for confidential transactions. Steeves further noted that Ethereum’s Metropolis update has also boosted confidence in the cryptocurrency.
Whether or not the increases will sustain is difficult to know, he said. But cryptocurrencies are nonetheless here to stay. He advised investors to keep tracking all cryptocurrencies mined with GPUs over the next one or two months.
Ethereum’s 2000% price increase this year has led miners to purchase AMD and Nvidia graphics processing units to mine the cryptocurrency, leading to a surge in demand.
Nvidia gained a $150 million boost thanks to the demand cryptocurrency miners created, according to the company’s second-quarter revenue report. This demand led many to believe that AMD and Nvidia should be concerned in case the market took a bearish turn. However, according to Barclays analyst Blayne Curtis, the companies should be safe for now.
If Ethereum moves to proof-of-stake, GPUs won’t give miners much of an edge on the network as payments are then verified in a different way. As such, demand would decrease. However, since the upgrade was pushed back to the end of 2018, the analyst raised his price targets for both Nvidia and AMD.
Essentially, Curtis expects both companies to keep on riding the cryptocurrency wave that has been helping them, at least for another year.
The analyst favors Nvidia due to its dominance in artificial intelligence, and due to the launch of a new Volta processor that should expand the company’s lead in the GPU market, keeping its performance above that of AMD’s for the foreseeable future.
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Last modified: March 4, 2021 5:02 PM