Ethereum-based ASIC miners may cause the price of AMD GPUs (and stock) to fall

There’s no shortage of cryptocurrencies to choose from these days. From the giants like Bitcoin down to the dregs like Dogecoin, the variety and popularity of cryptos grow every day. It’s been asserted that cryptocurrency mining (the processing of actually hashing out a new unit of a select cryptocurrency) is largely responsible for the exorbitant prices of GPUs over the past year, but a new device may give some relief to gamers on the hunt for a graphics card from AMD. Unfortunately, that may also mean a drop in the company’s stock price as well.

Analyst Christopher Rolland, a well-regarded financial expert with Susquehanna Financial, stated that ASIC manufacturer Bitmain has plans to release an Ethereum-based ASIC (application-specific integrated circuit) in the near future. As their names state, ASICs are high-specialized devices or chips designed for one specific purpose; in this case, it’s to mine Ether (the coin used on the Ethereum platform) at the highest level of efficiency possible.

What does this have to do with AMD? According to Rolland, as much as 20% of AMD’s sales are generated by Ether miners buying a graphics card. (As a note, Rolland also estimates that about 10% of Nvidia’s revenue is based on sales related to Ether mining.) The introduction of an Ether-specific ASIC may see a significant portion of these miners building new operations around that chip rather than a GPU, which could, in turn, lower demand for AMD cards. The result of lower demand would be a retreat from the inflated prices that have plagued gamers that have little to no interest in mining.

There is a major side effect to the ASIC that could rear its ugly head, though. Should a coin-specific ASIC be released and demand for AMD GPUs drop, revenue will drop right along with it, which could be problematic for Team Red. Rolland seems to think this is the case and moved his target for AMD’s share price to $7.50, almost half that of his previous goal of $13. That’s a steep decline; at the time of publication, AMD is trading at $9.92, which is a 5.08% drop for today alone. Rolland’s target for Nvidia also dropped to $200 from $215.

Are we telling you to run out and sell all your shares in AMD stock now? No. We at Notebookcheck aren’t qualified to make that call. However, the introduction of a new Ethereum ASIC would undoubtedly shake up an already tumultuous industry. It’s something to keep your eye on.

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