Posted on

AMD Earnings Surpass Target Amid Talk of Cryptocurrency Bull Market Return

The hardware manufacturer beat Wall Street expectations on adjusted earnings, as executives remain upbeat about the coming quarter.

United States transnational IT firm Advanced Micro Devices (AMD) over delivered on Wall Street expectations for earnings, the company confirmed in a press release on April 30.

AMD, which had previously seen volatility in its performance amid challenging 2018 market conditions, posted an adjusted share price of $0.06, 1 cent above the target.

The knock-on effect among investors was immediately palpable, with the company’s share price spiking more than 5% in the hours after the data was published.

“We delivered solid first quarter results with significant gross margin expansion as Ryzen and EPYC processor and datacenter GPU revenue more than doubled year-over-year,” president and CEO Dr. Lisa Su commented. She added:

“We look forward to the upcoming launches of our next-generation 7nm PC, gaming and datacenter products which we expect to drive further market share gains and financial growth.”

Like many hardware manufacturers, AMD experienced a rocky 2018, a situation made worse by the persisting cryptocurrency bear market, which reduced demand for associated mining hardware components.

As Cointelegraph reported, experts had warned the crypto winter could continue to cause a headache for the company, along with others such as Nvidia, which has nonetheless also seen a reversal in its fortunes for Q1 2019.

Bitcoin (BTC), meanwhile, continues to trade above $5,000, buoying sentiment that the bear market is definitively over after holding on to support around that level throughout April.

Posted on

AMD Sees Q2 Drop in GPU Sales to Crypto Miners

Chip maker Advanced Micro Devices (AMD) said Wednesday that sales of graphics cards (GPUs) to cryptocurrency miners fell during the second quarter.

The company published its quarterly earnings report late Wednesday afternoon, reporting a 3 percent quarter-to-quarter decline in revenue for its Computing and Graphics segment. The unit brought in $1.09 billion, which AMD said was a 64 percent jump year-over-year. In an earnings call, CEO Lisa Su added that approximately 6 percent of AMD’s revenue came from selling to crypto-miners, down from 10 percent in the first quarter.

Still, that quarterly decline was driven in part from lower revenue from what it called “the blockchain market” – that is, miners who use AMD’s graphics cards for the energy-intensive mining process.

AMD said in its report:

“Computing and Graphics segment revenue was $1.09 billion, up 64 percent year-over-year and down 3 percent quarter-over-quarter. Year-over-year revenue growth was driven by strong sales of Radeon products and continued growth of Ryzen products. The quarter-over-quarter decline was primarily related to lower revenue from GPU products in the blockchain market.”

Further, the GPU maker expects this trend to continue, but it anticipates that sales of other products will offset the decline.

The company expects the decline in GPU sales for crypto mining to continue, though it expects to offset the drop with sales from other products.

“For the third quarter of 2018, AMD expects revenue to be approximately $1.7 billion, plus or minus $50 million, an increase of approximately 7 percent year-over-year, and non-GAAP gross margin to increase to approximately 38 percent, driven by the sales growth of Ryzen and EPYC products, partially offset by lower sales of GPU products in the blockchain market,” AMD said.

During the earnings call, Su said “we’re expecting very little from blockchain” in terms of third-quarter revenue.

“If you update that on a full-year basis, for 2018 blockchain will be lower than what we had previously discussed in our last earnings call. Previously we said mid-to-high single digits … but we’ll watch that develop over the next two quarters,” she said.

AMD image via michelmond / Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

This article is intended as a news item to inform our readers of various events and developments that affect, or that might in the future affect, the value of the cryptocurrency described above. The information contained herein is not intended to provide, and it does not provide, sufficient information to form the basis for an investment decision, and you should not rely on this information for that purpose. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.

Posted on

GPU Prices Fall Following Slump in Cryptocurrency Markets

The price of specialized graphics processing units (GPUs) has been declining along with sinking prices in digital currency markets, Computerworld reported July 10.

While at the end of 2017 and beginning of 2018 cryptocurrency mining caused a sharp rise in the price of high-end gaming cards, the tendency seems to have reversed as crypto markets continue on a downward slope.

Add-in board (AIB) prices are reportedly falling and supplies increasing amid a severe drop in cryptocurrency prices. Manager of digital media at Jon Peddie Research C. Robert Dow told Computerworld that they predicted the drop, adding that “the cost to run the mining rigs is not insignificant, so when the price for the currencies drop… people will run rigs and choose to dump AIBs on the secondary market hoping to recover some cost.”

A survey conducted by Jon Peddie Research revealed that crypto miners purchased over 3 million AIBs to the tune of $776 million in 2017, where most of them had been produced by semiconductor and computer microprocessors manufacturer AMD. At the end of 2017 and the start of the current year, many high-end expansion boards were sold out, leading to a price increase.

According to Computerworld, in April AMD’s OEM 4GB RX 580 six-pack was sold out at the price of $3,600, while today it is available for $2,500. An Nvidia GeForce GTX 1080 Founders Edition, 8GB GDDR5X PCI Express 3.0 Graphics Card was sold out at a price tag of $1,050, but now can be purchased for $709. Dow commented on the changes:

“We also suspect that Nvidia and AMD have some built up inventory, and that will affect ASPs as well. Prior to the surge in buying of AIBs for cryptocurrency mining, AIB prices were flat to declining slightly which is a trend that will continue at least until new families of cards are introduced.”

The recent price slump has not deterred manufacturers from releasing new cryptocurrency mining hardware. In May, U.S. hardware manufacturer ASUS announced the release of its “second generation” cryptocurrency mining motherboard, which is scheduled to launch at the beginning of the third quarter of 2018.

In April, Chinese tech giant Bitmain announced the release of an Ethash ASIC miner, calling it the “world’s most powerful and efficient EtHash ASIC miner.” Bitmain surpassed the U.S. GPU manufacturer Nvidia in terms of overall profits in 2017, earning an estimated $3-4 billion and taking 70-80 percent of the market for Bitcoin (BTC) miners and ASICs.

Posted on

Graphics Card Suppliers to Cut Prices in July due to Crypto Market Slump, Sources Report

Sources say that the recent slump in the crypto markets is leading to graphics card suppliers lowering their prices, tech outlet DigiTimes reported June 29.

Unnamed sources from the “upstream supply chain” told DigiTimes that the sale of ASIC crypto mining hardware have been negatively impacted, with a predicted price drop of 20 percent in July. Among the affected companies are the Taiwan Semiconductor Manufacturing Company, as well as its integrated circuit (IC) design service partners like Global Unichip.

DigiTimes notes that the global graphic card market inventory is currently around several million units. The US-based Nvidia, another graphic card maker, reportedly has about a million GPUs set to be released, the sources told Digitimes. The sources continued that Nvidia’s next-generation GPUs will be postponed until late in the fourth quarter of 2018.

In May, Nvidia reported that they made $289 million from processor sales to the crypto market in the first quarter, predicting a two thirds drop in the second quarter due to the market correction. Also in May, Chinese ASIC manufacturer Bitmain reported that they were considering turning to AI due to the increase in stricter crypto regulations in China.

At the end of June, two analysts warned investors of Advanced Micro Devices Inc. (AMD) that the share price could fall if crypto mining becomes less in demand.

Posted on

Top Five Biggest Crypto Mining Areas: Which Farms Are Pushing Forward the New Gold Rush?

The mining industry is probably the oldest activity related to cryptocurrency. It all began in 2009, when Satoshi Nakamoto generated the first block on the Bitcoin network.

Today, mining is an entire industry which spans 114 countries around the world, and restlessly ensures the functioning of the global network of cryptocurrencies. According to analytics, the total profitability of the market over the past year comprised $4.1 billion. This figure doesn’t include the income earned from the sale of mining equipment, which is estimated to reach some $3-4 billion, as is the case of industry giant Bitmain.


Bitcoin network

Along with the popularity of mining, the complexity of the Bitcoin network also grows. Despite the fact that 80 percent of Bitcoin has already been mined, according to experts, the entire supply will be exhausted only by 2140. The situation is explained by the fact that the calculations necessary for the production of cryptocurrency are constantly becoming more complex, and the mining process takes more time and energy.

At the same time, between 30 and 60 percent of the profit gained from mining is spent on energy costs. Figures show that to maintain the entire computer infrastructure working with Bitcoin, it would take 30 nuclear reactors running at full capacity.

Blockchain size

Despite the reduction in the reward for generating blocks, a halving in the mining reward size from 25 Bitcoin to 12.5 Bitcoin and the increasing complexity of mining, miners can still receive up to $20 million per day in transaction confirmations. This staggering number attracts new players to join the ‘digital fever’ — and the equipment manufacturers to invent more efficient ways to extract Bitcoin.


In the summer of 2017, with the growing popularity of cryptocurrencies, market demand grew not only for professional equipment, but also for graphics cards (GPUs). In 2017 alone, more than three million discrete graphics cards were purchased for more than $776 million, Jon Peddie Research states. PC gamers were unable to purchase top model GPUs, which had sold out to miners before they even arrived on shelves, and the manufacturers of AMD and Nvidia cards fixed the growth of profits.


Image source: Wccftech

In the second quarter of 2017, Nvidia increased revenues by more than 50 percent, compared to the second quarter of 2016, reaching $251 million. AMD revenue for the same period increased by 18 percent — $1.2 billion. Following the fall of the market, interest in mining also decreased — AMD and Nvidia are both expecting a decrease in revenues in the second quarter of 2018.

At the same time, mining is reaching industrial proportions. Around the world, miners have united and created entire plants and hangars, and thousands of GPU cards are assembled into giant farms with peta hash capacities. Some companies repurpose former plants and invest millions of dollars into building infrastructures for mining. On June 6, the mining company CoinMint announced it plans to open a Bitcoin-mining plant in a former aluminium smelting factory in upstate New York, near the U.S.-Canada border. Supported by the U.S. government, CoinMint aims to create 150 jobs for the next 18 months and allocate $700 million to revamp Alcoa’s 1,300 acre plant.

At the same time, large players find more sophisticated methods of reducing energy costs and increasing equipment productivity — from building farms in caves to launching miners to space. Who are these industrial miners? Cointelegraph invites you to visit the five largest farms in the world.


Launched: 2012

Location: Washington, U.S.

Hashrate: 1.3 PH

The emergence of new players in young and profitable niches is often difficult to predict. Billionaires are those who, until recently, repaired computers or worked in an electronics store. One of them, Dave Carlson, began to mine with an ordinary GPU and now owns the largest mining farm in North America.

A software specialist and entrepreneur with 10 years of experience decided to take up mining after having faced financial problems in his previous job at an advertising company. Founded in the basement of his own house in 2012, the MegaBigPower company, which was later renamed into GigaWatt, turned into a multimillion-dollar business in just one year.

Today, the farm is situated in a former industrial warehouse. However, its exact location is not disclosed, similar to other farms, where owners prefer not to attract the attention of public authorities.


Image source: WSJ

As the company expands, Carlson estimates his monthly operating expenses, including salaries for 15 employees, at more than $1 million. The final figure of 1.3 peta hash, in his words, pays it off in full. Moreover, having managed to attract additional investments, the entrepreneur started production of mining equipment based on Bitfury chips for sale to other Bitcoin enthusiasts.

Carlson’s business is apparently going well. Among the factors that contributed to his success, Carlson specifies not only a desperate desire to escape poverty, but also the luck to have low electricity prices. Washington state, where the company is based, offers some of the cheapest power in the country with just $9.56 per kWh for individuals and $8.42 per kWh for businesses.

Genesis Mining

Launched: 2014

Location: Iceland

Hashrate: 1000 GH

Another owner of a truly large mining farm is Genesis Mining. Initially, their mining capacity was located in Bosnia and China, but today they are concentrated in Iceland and Canada. The cold climate — combined with cheap electricity prices — makes these countries attractive for mining cryptocurrency.

It is believed that Genesis mining farms are the largest consumer of electricity in Iceland. The electricity consumption and cooling issues are usually kept secret by large miners, so as is the exact location of their farms. Genesis, like Carlson and others, in accordance with their security policy, does not disclose the exact geographical location of its mining farms.


Image source: Bitcoin Wiki

Dalian mining farm

Launched: 2016

Location: Dalian, China

Mined monthly: 750 BTC

Electricity costs monthly: $1,170,000

Hashrate: 360000 TH*

*Given the average Bitcoin network hashrate of December 2017

China is known for its numerous plants for the manufacture of video cards and ASIC miners. Consequently, the miners in China have the advantage of purchasing equipment at lower prices. The delivery of equipment is cheaper — or even absolutely free.

China is amongst countries with the lowest price for electricity,valong with Venezuela, Taiwan, and the Ukraine. The most important factor in this matter is the decision of the Chinese government to encourage the industrial production of cryptocurrency by reducing the price of electricity consumption for the official owners of such farms.

China has a huge population, which increases job competition. In the country, industrial cities have existed for a long time, with workers living without visiting the outside world at all. The same is practiced at mining farms, where system administrators are ready to live in dormitories near a farm for a relatively small salary, ensuring uninterrupted production of cryptocurrencies.

All these factors create a fertile ground for the deployment of the largest mining farms, like in Liaoning province. Its small city of Dalian is the center of mining in China and, probably, the whole world. It is a three-story mining farm with a specially designed ventilation system. Currently, the farm in Dalian accounts for more than three percent of the hash rate of the entire Bitcoin network.


Image source: Bitcoin Wiki

Another Chinese province, Sichuan, launched an industrial farm near a hydroelectric power station. Since 2016, the capacity of the farm has grown almost threefold and reached 12 PH. Other provinces, throughout China, are also not without their own large mining farms.You can easily understand, when such a farm is nearby, because of the piles of obsolete mining equipment.


Image source: Politico

Swiss mining farm

Launch year: 2016

Location: Linthal, Switzerland

Hashrate: Unknown

The largest mining farm in Switzerland is located in the small village of Linthal in the eastern part of the country. Its owner, Guido Rudolphi, has already run a mining farm in Zurich but found the operating costs too high. After almost two years of searching, Rudolphi opted for Linthal, which offers the most attractive prices for electricity in the country.


Image source:

The new farm, located in a former factory building, is considered the largest in Switzerland. Although the issue of cooling processors still remains relevant, Rudolphi insists that the possible financial benefit is not decisive for him. The world needs Bitcoin more for political reasons, he believes. The owner of the farm compares the cryptocurrency with the internet of the 1990s, when many people looked at this phenomenon with a great deal of skepticism.

Russian farms

Mined monthly: 600 BTC

Hashrate: 38 PH

Russia is also among the countries in which large mining areas are located. The largest of these is believed to be located near Moscow, though the exact location of the farm is not disclosed. The power of the Moscow farm allows for the mining of approximately 600 Bitcoin a month. The currency is generated by 3000 Antminer S9 ASIC-miners and, for this, a performance of about 38 PH per second is needed. To cool this amount of equipment, modern ventilation from Iceland is used. The electricity expenses are over $120,000 each month, states.


Image source:

Looking to the future

Major mining farms began to appear only a couple of years ago. In 2014, these were farms of enthusiasts. Today, mining farms consist of large technological infrastructures with a regular staff of professional employees, like Coinmint, which combine into agglomerates at the site of former factories and hangars. With the increased complexity of the network and the declining prices of cryptocurrency, individual miners are pulling out. However, those players who managed to deploy large-scale infrastructures will be able to provide an ideal balance of productivity and low cost.

Posted on

Analysts Concerned About Crypto Mining Impact on AMD Share Price

While Advanced Micro Devices Inc.’s (AMD) shares have seen substantial growth in the past month due to a cryptocurrency mining boom, two analysts warn that investors could be disappointed should mining die down, MarketWatch reported June 20.

In the past month, AMD’s stock has gained around 30 percent thanks to the graphic processing units (GPUs) produced by the company, which have established themselves as effective hardware for crypto mining. Some analysts, however, have expressed concern that the recent success of AMD’s stock may not last long if crypto mining quiets down, or if miners choose GPUs by other manufacturers.

Stacy Rasgon, an analyst from Bernstein, claims that over the course of the recent cryptocurrency boom, AMD’s GPUs have benefited miners, though the devices were originally designed for gaming. Ragson said that the GPU supply chain to gamers was constrained industry-wide. Should miners shift to AMD’s rivals’ products, she thinks that the company “could suffer not only unit shortfalls in a crypto decline but also ASP (average selling price) pressures if mix trends down, potentially exacerbating any effects.”

Joseph Moore from Morgan Stanley also worries about the impact of crypto, stating that AMD is “facing an imminent Nvidia product launch that they may not have an answer to for another year.” He explained:

“Cryptocurrency strength has to some degree offset the slow and steady progress establishing momentum in desktop and server microprocessors after several years away from those markets — but that higher revenue has driven higher operating expense, which further raises the bar for the processor business if crypto momentum should fade.”

So far this year, AMD’s shares have gained 61 percent, closing at $16.52 today.

AMD six month stock price

AMD six month stock price. Source: Nasdaq

Despite the growth crypto mining has provided to the graphic cards industry, CEO of AMD Lisa Su recently expressed caution around blockchain and cryptocurrency, saying it is “a bit of a distraction, in the short term.” Su said that blockchain and mining made up around 10 percent of AMD’s revenue over the quarter.

Posted on

Nvidia Reports First Quarter Crypto Sales, Expects Two-Thirds Drop In Second Quarter

Nvidia (NASDAQ: NVDA), an American graphics processing units (GPUs) manufacturer, has recently reported that the company generated $289 mln from processor sales to the crypto market, Bloomberg reports May 10.

This is reportedly the first time Nvidia shared information regarding its revenue from chip sales to the crypto mining market. According to Susquehanna analyst Christopher Rolland, Nvidia’s first-quarter sales from mining hardware were anticipated to be much lower, around $200 mln.

Nvidia CEO Jensen Huang explained that they were able to exceed expectations due to increased demand for GPUs from crypto miners, resulting in higher prices. “Crypto miners bought a lot of our GPUs in the quarter and it drove prices up,” Huang claimed, adding that high prices prevented other consumers, such as gamers, from buying into the newest GeForce graphics card series.

Nvidia’s first-quarter crypto sales amounted to over 9 percent of overall revenue for the company, which stood at $3.2 bln. Chips for crypto mining made up 76 percent of (Original Equipment Manufacturer) OEM revenue, which was up 115 percent from the last quarter. In manufacturing, OEM components are those, which are made by one company and then used in a product that is marketed by another.

Nvidia said in an earnings call that sales to the crypto market will likely decrease by two-thirds in the next quarter. Revenue for miners decreased earlier this year, when cryptocurrency markets underwent a correction following record highs in December 2017. Hashrates have continued to grow however, indicating that the mining pool continues to grow globally.

The main competitor of Nvidia, Advanced Micro Devices (AMD) revealed in April that the company generated 10 percent of overall sales from crypto and Blockchain-related sales. The company’s CEO Lisa Su noted the potential of blockchain technology, but stressed that it is not the main growth factor.

“We feel we have a very good idea of what people are using our products for. It’s a nice growth factor [blockchain or mining], but it’s certainly not the dominant growth factor in our story.”

Posted on

AMD CEO: Blockchain Is Important But “A Bit Of Distraction”

CEO Lisa Su of AMD, an American multinational semiconductor company, said that Blockchain is “a bit of a distraction in the short term” in an interview with CNBC April 26.

Su admitted the importance of blockchain, stating, “It’s a very important technology […] The idea you can do all these peer-to-peer transactions, a decentralized network, it’s a good technology, but frankly l think it’s a bit of a distraction, in the short term.”

Su mentioned better-than-expected growth in her company in the first quarter of the current year, stating that rather than getting caught up in the hype surrounding blockchain, they would focus on their core markets. When asked whether she thought blockchain was “temporary in nature… and not a reliable avenue of future growth” she said:

“The long-term technology around blockchain is an important technology, and we’re spending a lot of time with some of the key influencers in this area, so I think it’ll be here for the next 3,4,5 years. Now what it does tomorrow vs. yesterday, I think that’s anyone’s guess.”

AMD’s stock jumped 11 percent on April 25 after an announcement that they had outperformed earnings estimates. When asked by an interviewer whether the company was underplaying the role of Ethereum mining hardware in this success — the interviewer cited 23% of first quarter 2018 revenue — Su replied:

“We believe blockchain or mining was about approximately 10 percent of our revenue during the quarter. And the truth is there are a lot different factors in these estimates. We feel we have a very good idea of what people are using our products for. It’s a nice growth factor, but it’s certainly not the dominant growth factor in our story.”

While in her recent statement Su expressed caution around blockchain technology and cryptocurrency, in December last year she claimed that AMD was very interested in participating in blockchain technology and the cryptocurrency mining market.

Posted on

Crypto Mining Made Up 10% of AMD's Revenue in Q1

Cryptocurrency mining demand accounted for as much as 10% of AMD’s first-quarter revenue this year, according to the chip maker.

“The strength in Radeon products was driven by both gaming and blockchain demand. We believe blockchain was approximately 10% of AMD revenue in Q1 2018,” chief financial officer  said Devinder Kumar during an earnings call on Wednesday after AMD revealed that it made $1.65 billion in first-quarter revenue, a 40% increase year-over-year.

Kumar noted that the combined gaming and blockchain demand contributed to a 95% increase year-over-year for its GPU and computing markets. That said, Kumar indicated that the company believes that it will see a “modest decline in graphics [revenue] due to blockchain.”

All in all, AMD anticipates less than 10% of its 2018 revenue will come from cryptocurrency miners.

“Based on the strength of our business momentum, for the full year 2018, we now expect revenue to increase by mid-20s[%] over 2017, driven by the ramp of our new products. Blockchain revenue to be mid to high-single-digit percentage of revenue for 2018,” he said during the call.

Looking past the figures, however, CEO Lisa Su struck a somewhat optimistic tone for AMD’s prospects in the blockchain infrastructure sector.

She remarked:

“I do think the blockchain infrastructure is here to stay. I think there are numerous currencies. There are numerous applications that are using the blockchain technology. We don’t see a significant risk of secondhand GPUs coming into the market. I think what you find is that, one, there are number of different currencies, and, two, a lot of these users that are buying GPUs these days are actually buying them for multiple use cases, both commercial and consumer.”

“They’re not necessarily buying just for mining,” Su continued. “I think, most people are comparing sort of this blockchain time period to the last one which was a couple of years ago and I think there are a couple of important differences. I think the first one is that there are multiple currencies and multiple applications that are being used. And what we’ve seen is that people who are mining do go from one currency to another depending on what’s happening.”

The only unknown factor at play involves retail sales, as Su said it was “hard to tell” whether retail sales go toward gamers or miners. But even there, AMD believes it has a close approximation of the demand.

“I think the breadth of the blockchain applications and also the breadth of the customer base give us that belief,” she later concluded.

Cryptocurrency mining screen image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Posted on

GPUs And ASICs – A Never Ending Battle For Mining Supremacy

Since Bitcoin’s inception in 2009, cryptocurrency mining has been popular both for average enthusiasts and hardcore fanatics.

In the early days there was no such thing as an application-specific integrated circuit (ASIC), which are more commonly known as ASIC chips. Mining was first done with regular Central Processing Units (CPUs), which meant PC enthusiasts with the best hardware had a head start mining Bitcoin.

According to an article by University of Washington Professor Michael Bedford Taylor, a little over a year later in 2010, people around the world were given the code to begin mining Bitcoin with Graphics Processing Units (GPUs), which sparked the beginning of many a nerd’s love affair with mining the preeminent cryptocurrency.

It didn’t take long for hobbyists to start building rigs, with graphics cards suspended over a motherboard, connected with PCIE extension cables. This led the way to a plethora of different adaptations, as miners looked to increase their hashing power.

The party was spoiled somewhat with the development of ASIC miners, which entered the market in 2013 with more powerful chips constantly being developed that completely outperformed their GPU cousins.

Nevertheless, enthusiasts have continued to build mining rigs with the top graphics cards. This has been a boon for GPU manufacturers Nvidia and AMD over the past few years.

Mining – in layman’s terms

Mining is the process in which transactions are recorded and immutably stored on the Bitcoin Blockchain. For a more in-depth explanation of the process, you can read our essential guide here.

This process is done by computers, which firstly take Bitcoin transactions and bundle them into a block. Once the block reaches its maximum capacity (1MB in the case of Bitcoin), the block is then ready to be added to the Blockchain.

In order to do this, a miner, using either GPUs or ASIC miners, must solve a complex Proof of Work cryptographic algorithm in order to add the block to the Blockchain. Should they be lucky enough to do so, they are rewarded a certain number of Bitcoin. At present, the reward is 12.5 BTC.

Additionally, miners earn a fee for processing transactions that are stored on blocks. The higher the transaction fee, the sooner your transaction is processed by miners.

GPUs vs ASIC miners – a never ending battle

Those miners that got into the game early would have reaped the benefits of the scaling difficulty of mining. The process is designed to become more difficult as more miners vie to validate transactions and unlock blocks.

In the early years, there weren’t that many miners so rewards were higher and the algorithms were less difficult to solve. But as more people started using their PCs to mine, this became more difficult.

Mining started out with CPUs validating the blockchain, which moved on to GPUs before the creation of ASIC chips changed the game altogether.

Bitcoin’s Proof of Work algorithm is known as SHA256. Both GPUs and ASIC miners can process this algorithm, but the latter chips are far more efficient.

So when ASIC miners, like Bitmain’s powerful Antminer S9 came onto the scene, traditional GPU miners’ profitability suffered due to the advantage ASIC chips had in solving the SHA256 algorithm.

Luckily, the emergence of altcoins like Ethereum reinvigorated the GPU mining sector, with an algorithm that favoured GPU chips. Described as ASIC resistant, this allowed hobby miners to employ their PCs and GPUs to mine Ethereum without the threat of of mass-produced ASIC miners cutting into their profits.

Despite the existence of ASIC miners, the demand for GPUs soared and even led to a stock shortage in the middle of 2017.

AMD and Nvidia couldn’t keep up with the ravenous appetite for their GPUs. Some retailers in the US completely ran out of stock of AMD cards as enthusiasts clamoured to get their hands on GPUs as the price of Ethereum and Bitcoin steadily increased throughout the year.

It was hardly surprising that both Nvidia and AMD enjoyed solid performance gains in their respective share prices. Nvidia in particular grabbed headlines at the end of the year, ending as the top chip manufacturer on the Standard & Poor’s 500 index.

Nvidia also launched their new Volta-powered Titan V graphics card which gamers with money to burn lined up to buy.

Not focused on mining

While it’s hard to believe that AMD and Nvidia resisted the urge to turn their focus to building GPUs for mining purposes, both have maintained that their priority is building graphics cards for gaming.

While Nvidia have designed boards dedicated to mining in 2017, most of their chips have been built for the conventional purpose of GPUs – that is rendering graphics. Nvidia admitted that they had seen massive growth due to the demand of the cryptocurrency mining industry.

Meanwhile AMD took a more measured approach, announcing that they wouldn’t include cryptocurrency mining in their long term growth planning in July 2017. But six months later, CEO Lisa Su had changed her tune, expressing AMD’s plans to enter the Blockchain space – depending on the rate of worldwide adoption in 2018.

Nvidia’s CEO Jensen Huang gave a fresh take on cryptocurrencies and his company’s involvement in March. Given that their GPUs are in computers around the world, they have inevitably become part of the Bitcoin mining web.

As Huang stated on CNBC’s Fast Money show, their “processor serves as the perfect processor to enable this supercomputing capability to be distributed”. GPUs are just one of many cogs embedded in the network of computers constantly validating the Bitcoin Blockchain.

Despite a rocky start to the year for cryptocurrency markets overall, Huang was confident that the technology was far from dying:

“The ability for the world to have a very low-friction, low-cost way of exchanging value is going to be here for a long time – Blockchain will be here for a long time.”

GPUs under the cosh

While Nvidia and AMD are watching the cryptocurrency space closely, and have enjoyed growth from it’s break into the mainstream in 2017, they are facing stiff competition from companies developing hardware specifically focused on cryptocurrency mining.

As reported in February by CNBC, Chinese mining hardware manufacturer Bitmain posted bigger profits than both Nvidia and AMD in 2017. Bitmain are understood to have made between $3 to $4 bln in operating profit, compared to Nvidia’s $3 bln.

This is substantial, given that Bitmain only manufacture ASIC miners for a number of different cryptocurrencies.

Bitmain’s flagship Antminer S9 is touted as the world’s most efficient Bitcoin miner, but the company has continued to branch out, in particular creating miners that can solve different Proof of Work algorithms.

This has led to a number of outcries from the wider cryptocurrency community – opposing any monopoly on mining which validates various Blockchains, citing securities concerns from overcentralization.

Smaller cryptocurrencies like Siacoin considered hard forking their Blockchain when Bitmain launched it’s Antminer A3 Siacoin miner but eventually opted not to do so, while Monero carried out with this plan in the wake of Bitmain’s launch of their Monero miner last month.

Even Ethereum has finally come under threat, after Bitmain announced the launch of its first ever Ethash ASIC miner last week. Of course the Ethereum community has already been debating the merits of a hard fork to counter the Bitmain Ethash ASICs. Ethereum founder Vitalik Buterin’s white paper suggests that the protocol is already ASIC resistant:

“One notably interesting feature of this algorithm is that it allows anyone to “poison the well”, by introducing a large number of contracts into the blockchain specifically designed to stymie certain ASICs.”

There is no official word on the way forward from Ethereum, while Bitmain’s website indicates that the first batch of Antminer E3 units will be shipped mid July.

In a competitive, corporate world, the emergence of ASIC miners was always going to make it hard for amateur enthusiasts to get ahead. Nevertheless, profitable mining is still achievable with GPUs, but investors with big cheque books can get their hands on the most powerful hardware on the market – whether or not the community likes it.