Cryptomining: A Major Boost for Hardware Firms
Nvidia CEO Jen-Hsun Huang reported a 54 percent gain in the company’s original equipment manufacture sector. His secret? Cryptominers high demand for the company’s processing boards and graphics cards.
New Market Ventures
As the demand for cryptocurrencies rises steadily, the need for more efficient miners also follows suit. But as miners rely heavily on the quality of their hardware, the market demand for cryptocurrencies is also fueling a spike in computer components. At least, those that are related to the mining of cryptocurrency. In a report conducted by Plos One Journal in 2015, the value of bitcoin moves seamlessly down the market chain from investors, to miners, and now to hardware suppliers.
Ladislav Kristoufek explains how mining is ultimately an investment opportunity, in which miners exchange electricity and computational power for cryptocurrencies. Kristoufek points out that, “the potential of bitcoin mining (and the mining-based cryptocurrencies) has led to the development and production of hardware specifically designed for this task and the formation of mining pools, where miners merge their computational power.”
Thus a supplementary market, one of many, has developed in the hardware sector. In this market, much like any free market, the smaller miners who aren’t able to compete with the increasing costs and hash rates, are weeded out. Only the most profitable survive and when the profitability is contingent on high-end components, hardware suppliers also benefit.
TSMC and AMD
Taiwan Semiconductor Manufacturing Company reported similar positive third quarter profits. Insofar as TSMC is contracted with Bitmain, the world’s leading maker of mining rigs based in China, both companies will continue profiting from high demand for crypto-mining rigs.
Co-CEO of the Taiwanse based firm, Mark Liu, reported that, “crypto-miners accounted for between $350 and $400 million in revenue last quarter, or up to around five percent of the company’s overall sales. TSCM’s size, however, poses a problem for other smaller mining manufacturers wishing to do business, but Liu still says there has been, “a pick up from the third quarter and [will] stay on for the fourth quarter.”
The graphics card maker, Advanced Micro Devices, has also been experiencing a swell in sales related to crypto mining. After an earnings announcement on July 25, the company’s shares rose 11 percent as well as making it one of the top performers on the S&P 500. Much of this demand, according to AMD’s chief executive, Lisa Su, was credited to the demand of cryptominers.
As of yesterday, however, the company is reeling in many of its expectations. Su told Business Insider that,
“We [are] predicting that there will be some leveling-off of some of the cryptocurrency demand…As we look at it, it continues to be a factor, but we’ve seen restocking in the channels and stuff like that. So we’re being a little bit conservative on the cryptocurrency side of the equation.’’
The conclusions that can be drawn from each company are positive, especially for the staying power of cryptocurrencies. Though Nvidia’s third-quarter earnings have yet to be unveiled, Nvidia’s CEO announced in August that “Cryptocurrency and blockchain [were] here to stay,” despite regulatory strangleholds.
Progress is being made and though there are signs of leveling-off, there are few signs indicating a drop in activity. The amount of money and innovation being plugged into the sector are only evidence of these strengths. Just take a look at the hardware industry.