As Nvidia backs off, AMD doubles down on crypto

The combination of an increase in mining difficulty and an aggressive bear market has seen the profitability of mining bitcoin down significantly since the start of the year. It has also been some time since ‘home-based’ bitcoin mining rigs could compete with large-scale operations that benefit from economies of scale and lower electricity costs.

This profit squeeze has spread beyond BTC too, with even individual GPU altcoin miners feeling the pinch. Many are turning off their machines entirely as small-scale mining in many parts of the world is no longer a profitable venture at current market prices.

Surprising then, that despite this drop in mining profitability, leading GPU manufacturer Advanced Micro Devices (AMD) has decided to expand further into cryptocurrency mining.

AMD’s new miners

Next to Nvidia, AMD is the largest player in the GPU market and has benefitted from the "crypto gold rush" of 2017 when demand for its graphics cards surged as they become a popular choice for crypto mining.

On November 5, in partnerships with Sapphire, ASROCK, ASUS, MSI, Biostar, TUL and Rajintek,AMD announced the launch of eight new "blockchain compute solutions" that enable users to mine proof-of-work coins using specifically developed GPU rigs.

The new GPU rigs range from simple mining solutions such as the ASUS I, to more advanced setups such as the Rajintek CERBEROS Enterprise Solution, which comes with a 20 GPU capacity and advanced industrial EATX power supplies

AMD revealing in its Q3/2018 quarterly report that "blockchain-related graphics processing unit (GPU) sales in the third quarter were negligible", but nonetheless appears to be playing the long game in blockchain terms – stating on its website:

"Blockchain is a paradigm shift that fundamentally revolutionizes the way consumers and businesses transmit, process and secure data. It will redefine how we manage supply chains, maintain business transactions and exchange financial assets for decades to come. […] Currently, the most well-known use case of blockchain is cryptocurrency, however, the number of applications and the potential impact of blockchain technology is enormous."

Prices are not listed for the new mining rigs. Instead, customers can contact AMD’s respective partners if they want to make a purchase.

Nvidia steps away from crypto

The move by AMD to push further into the cryptocurrency mining business is even more remarkable in light of its biggest competitor Nvidia announcing in August that it plans to steer clear of the digital asset business.

The company’s CFO, Colette Kress, said in a statement: "We believe we’ve reached a normal period as we’re looking forward to essentially no cryptocurrency as we move forward. Our revenue outlook had anticipated cryptocurrency-specific products declining to approximately $100 million, while actual crypto-specific product revenue was $18 million, and we now expect a negligible contribution going forward."

The sentiment was shared by Nvidia CEO, Jensen Huang, who added that profitability of the cryptocurrency mining GPUs business had dropped significantly in light of the crypto bear market since the start of the year.

Who’s making the right move?

It will be interesting to see if AMD’s push in the crypto space will pay off or whether Nvidia’s move to refocus on other business areas will have been the right decision.

To a large extent, this will depend on the performance of the crypto markets. If bitcoin starts to rally again — and with it the GPU mining-friendly altcoins — we could witness another mining gold rush that could see AMD’s shelves emptying out fast. On the other hand, if the market fails to recover to previous highs, Nvidia will have likely made the right bet.

Since both Nvidia and AMD are publicly-traded, their involvement or non-involvement in the cryptocurrency business also has the potential to affect their share prices. While both companies downplay the effect that their cryptocurrency businesses have on their bottom lines, another massive rally in crypto assets could end up boosting AMD’s share prices and leave Nvidia behind.