The 2017 cryptocurrency market rally and subsequent GPU mining boom have created near-insatiable demand for graphics cards, leading many to question whether Nvidia and ADM should be concerned if the market takes a bearish turn. However, market analysts say that these GPU manufacturing giants have little to worry about because blockchain mining will be an “important driver” for growth moving forward.
Just last month, a new line of graphics cards–the AMD Vega 56–sold out in 5 minutes on almost every major online marketplace, forcing computer gamers to pay far over MSRP for access to the latest hardware. At the height of ethereum’s price rally earlier this year, demand for GPUs was so great that ethereum miners began leasing Boeing 747s to ship the processors directly from the manufacturers.
This rapacious thirst for graphics processors has led to a surge in Nvidia and AMD stock prices. Although both companies maintain that their primary focus is the gaming market, each has taken steps to cater to the mining community. Both are developing stripped-down GPUs designed specifically for mining applications, and AMD has released drivers for cryptocurrency miners.
The proliferation of cryptocurrency mining has raised concerns that a crypto market correction could lead miners to disassemble their rigs and flood the secondary market with graphics cards, greatly diminishing demand for new GPUs. This happened in 2014 and caused manufacturer stock prices to deflate.
However, according to a new report from MarketWatch, the graphics card manufacturing duopoly has nothing to worry about this time around.
The report cites Jeffries analyst Mark Lipacis, who says that the risk of a “crypto-driven inventory correction…is low in the near term.” The reason for this is that the stripped-down, mining specific GPUs are not likely to attract attention from gamers on the secondary market.
Moreover, Lipacis anticipates that GPU mining will be an important driver of graphics processing innovation moving forward:
We actually believe that the technology they are based on, called Blockchain, which supports secure accounting of distributed ledgers, has applications in financial services beyond cryptocurrencies. We expect demand for Blockchain GPUs (including for cryptocurrencies) to continue to grow and become an important driver for GPU growth, even if with some degree of volatility.