Nvidia (NVDA) and Advanced Micro Devices (AMD) have recently faced fresh competition in the crypto chip mining business, which has Wall Street investment company Morgan Stanley concerned.
While Nvidia and AMD have traditionally been the go-to graphics chip suppliers for individuals wishing to mine digital tokens or play video games, a high-performance semiconductor manufactured by Bitmain Technologies might capture a piece of that market. The Antminer E3 chip’s performance and pricing have Morgan Stanley analyst Joseph Moore concerned. The chip, manufactured by Chinese firm Bitmain Technologies, is expected to be on sale in July for roughly $800. (Read more: NVIDIA’s Crypto-Mining Boom Is Coming to an End: RBC.)
“While this was widely predicted, the capability is somewhat more than our estimates, with hash rate 7.5x graphics cards at $800 pricing, and around 5.7x the power consumption,” stated the analyst in a Barron’s research report. “The better economics are anticipated to drive down mining revenues for graphics processors (which were already under pressure) and mark the end of the cryptographic graphics scarcity by mid-year.” The analyst believes AMD will be hit harder than Nvidia, however both may experience a drop in demand from miners.
The analyst, who rates both Nvidia and AMD as overweight, believes the businesses should concentrate on other high-growth sectors of the semiconductor industry. One of them is artificial intelligence, where Nvidia has surpassed several of its competitors. According to Rosenblatt Securities analyst Hans Mosesmann, Nvidia’s technical achievements in that area have given them a grip on AI. (Read more: Nvidia to Control AI Market: Rosenblatt.)
However, Moore is not the only Wall Street analyst who is concerned about Bitmain’s mining chip. In a statement to Barron’s clients, RBC Capital analyst Mitch Steves cautioned that the Antminer might entice Nvidia GPU chip customers. He noted that for some time, the primary customers of Nvidia’s graphics hardware have been those who use them to mine cryptocurrencies.
The Antminer E3’s release coincides with a drop in the price of the biggest cryptocurrencies after their stratospheric climb in 2017. Even though costs are lower than they were in December, demand for graphics cards to mine bitcoin has surged, resulting in chip shortages. This has resulted in an increase in AMD and Nvidia shares. Nvidia is up more than 13% so far this year. AMD has performed poorly, falling more than 10% since the beginning of 2018.
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