While everyone else is racking their brains on how to come up with the best strategy to get the most from the cryptocurrency market, top GPU manufacturers Advanced Micro Devices (AMD) and Nvidia continue to rake in profits even if they don’t trade a single dollar’s worth of these digital assets. These days, their graphics processing units (GPUs) are selling like hotcakes after they became the standard for every crypto mining rig. But the good times will not likely last for long as industry experts predict a downturn in GPU demand later this year, which could impact the earnings for both companies.
Miners Bought 3 Million AMD, Nvidia GPUs Worth $776 Million
AMD and Nvidia became big winners when the sector rapidly expanded last year. Lured by the tokens’ skyrocketing prices, everyone with enough technical skill wanted a piece of the action by building their own home-based cryptocurrency mining setups.
Based on last year’s data, cryptocurrency mining suddenly became an unexpected cash cow for GPU manufacturers AMD and Nvidia. Miners were happy to pay to get set up with powerful mining rigs spending $776 million for 3 million GPUs in 2017 alone.
AMD and Nvidia became big gainers due to the sudden surge in this mining-related GPU demand. In fact, AMD’s stock price had a massive 40-percent increase since January this year, a trend that was also mirrored, albeit in a more modest way, by Nvidia’s nearly 25 percent gain this year. While gaming remains the bread and butter sector for these manufacturers, the demand from crypto miners no doubt helped push those numbers even higher.
GPU Demand Plummets in 2018
However, Nvidia and AMD’s happy days could be about to end, according to experts. There are predictions that demand for GPUs might fall in the second half of 2018.
The slow down for mining-related GPU demand is attributed to a number of factors. These include the crackdown on cryptocurrency mining by numerous governments all over the world, as well as the scaling down of some of the larger mining firms. In addition, a number of “individual miners and small mining farms” are expected to close shop by then due to the low crypto prices and rising mining costs.
But the upcoming decline in mining-driven GPU demand is not expected to affect both companies’ bottom line significantly. Mining-related GPU sales only account for 10 percent of AMD’s $5.3 billion revenue last year as the gaming sector still accounts for the bulk of its sales. Similarly, Nvidia reported that mining-driven sales account for only 10 percent of its sales last quarter.