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Gaming Firm Wants to Pay Players to Mine Cryptocurrency

When the crypto chips are down companies often seek alternative methods of generating income. Gaming equipment giant Razer wants to pay gamers to mine crypto using their graphics cards.

The new crypto rewards program is called ‘Razer SoftMiner’, and it enables users to put their GPUs to work mining “Silver” which according to the firm is not actually a cryptocurrency. The catch for the miners is that they don’t get to keep what they mine but will get rewarded in the way of discounts or offers from the company. In a Tweet the firm stated;

“Have a gaming rig on idle at home? Here’s a new way to score Razer Silver: launch Razer SoftMiner on your PC and start racking up Silver—one step closer to the reward you want, for doing nothing at all.”

It does come with the caveat that running the software “uses a substantial amount of your GPU power,” according to PC Gamer. The FAQ goes on to explain;

“We work with crypto mining technology to harness your computer’s GPU. In turn, we award you with Silver, giving you access to Razer’s ecosystem and suite of rewards.”

In other words the San Francisco based company will be keeping the crypto that users mine and offering them other tokens to trade for ‘rewards’. It has not specified which cryptocurrency will be mined but it will have to be one that can be done using graphics cards and not higher powered hardware. There does not seem to be an advantage for users that can simply install their own software to mine crypto which they can at least keep themselves.

Razer has added that mining speed will be affected by the specifications of the GPU and obviously the amount of idle time that can be dedicated to it. “If you have the proper setup, you can earn approximately 500 Razer Silver or more within a day!,” it added without specifying the value of this ‘silver’.

Someone had crunched the numbers and came out with a value of around $0.44 per day mining at full power, or $0.0009 per token. Another pinch is that the silver mined expires after a year so it must be redeemed before then which prevents amassing a whole lot of it.

Considering the cost of electricity and the wear and tear on the hardware this does not sound very lucrative at all. A win for Razor it seems, especially if it can accumulate enough crypto at low prices and then sell the stash when the markets recover.

The post Gaming Firm Wants to Pay Players to Mine Cryptocurrency appeared first on Ethereum World News.

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New ASUS Partnership Allows Users to Mine Crypto With Idle GPU Power

ASUS to allow its graphics card owners to mine crypto and cash out via PayPal and WeChat through a new partnership.

Taiwan-based tech giant ASUS has partnered with GPU mining platform Quantumcloud to allow users to mine crypto via their graphic cards, multinational tech media TechRadar reported Thursday, Nov. 30.

According to the agreement, ASUS graphic cards owners will be able to mine crypto through Quantumcloud software and withdraw earnings using PayPal or Chinese app WeChat.

The new partnership allows gamers to monetize idle GPUs when the units are not occupied by graphic-consuming processes by mining cryptocurrencies such as Bitcoin (BTC).

However, Quatumcloud does not guarantee specific profits or outcomes for users, stating that users have to consider usage costs on their own, according to U.K.-based tech publication HEXUS.net. The GPU-mining startup claims to provide high standards of customer data protection compliant with General Data Protection Regulation (GDPR).

Earlier in November, ASUS teamed up with California-based semiconductor supplier AMD and other major tech companies to produce eight new crypto mining rigs. Partner companies reportedly include Sapphire, ASROCK, and MSI, among others.

In July, Cointelegraph reported that GPU prices were declining along with sinking prices in crypto markets. Other GPU manufacturers like Nvidia have been negatively affected by the current bear market. When the firm announced its Q3 results earlier this month, it revealed a “crypto hangover” due to disappearing sales to crypto miners.

Meanwhile, major crypto mining firms in China have reportedly started selling off their mining hardware by weight, following a recent collapse of crypto markets that began in mid-November.

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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.

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Crypto Market Downturn Puts Drag on High-End GPU Prices

New research suggests that prices for high-end graphics cards – coveted by both cryptocurrency miners and gamers alike – are falling.

The research was conducted by John Peddie Research, a tech marketing and consulting firm based in California. As tech publication Computerworld reported on Tuesday, the report shows higher-priced products from Advanced Micro Devices (AMD) and Nvidia have dropped significantly from their highs experienced earlier this year.

For example, according to Jon Peddie Research, the price of an OEM 4GB RX 580 six-pack – a top-notch GPU from Advanced Micro Devices – was $3,600, having completely sold out as of April. But that product is available on the market for $2,500, a reduction of $1,100.

“We have predicted a drop in [application specific processors] as [cryptocurrency] prices dropped,” C. Robert Dow, manager of digital media at Jon Peddie Research, said in an email to the publication, adding:

“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 [add-in-board] on the secondary market hoping to recover some cost.”

Meanwhile, the research’s data also show that the number of AIB shipments directly to cryptocurrency miners dropped about 55.5% compared to the same quarter of last year.

From the charts

Additional data provided by a website called PCPartPicker, which tracks the prices of computer components, also indicates that there is a general downtrend occurring for GPUs.

For example, the chart below shows price developments for the Radeon RX Vega 64 – a product hailed by some tech bloggers last year as a premier tool for mining cryptocurrencies. In spite of several short upticks, the price of that product seems to have peaked in early March.

Similar accolades were published for the GeForce GTX 1070 Ti – but it, too, has seen a gradual price decline since around the same time.

Whether this means anything in the long-term remains to be seen – cryptocurrency mining is effectively an electricity arbitrage, where gains are made when the cost of mining (including hardware, energy and labor) is less than the return on the coins once sold.

Given that the cryptocurrency market has declined overall since early this year, demand would, in theory, fall in tandem with those figures.

More answers could come in the form of future financial results from Nvidia and AMD, both of which have made a point to discuss the impact of crypto mining on their bottom lines. While business was great by the end of last year, that state of affairs may be changing, according to these figures.

GPU image via Shutterstock/Graphs from PCPartPicker.com

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.

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Bitcoin Gold Introduces Algorithm To Counter ASIC Centralization

Bitcoin Gold Hard Fork At Block 536,200

Bitcoin Gold was founded with the decentralization of mining in mind, adopting algorithms which ASICs cannot mine on. Many critics of ASIC mining machines see these specialized pieces of hardware as a source of centralization, as ASICs can be bought en-masse, putting a copious amount of relatively affordable hash power into the hands of a single entity. 

A group of individuals thought it best to build off of this criticism, forking off the main ASIC-infested Bitcoin blockchain into Bitcoin Gold in October 2017. BTG first enlisted the use of the Equihash algorithm, which was ASIC-resistant at the time. In the nine months since then, new Equihash ASICs have begun to edge out GPU miners, with these specialized machines offering an exponentially higher dollar/hash ratio.

On Tuesday, the Bitcoin Gold team announced that it had successfully implemented a network upgrade by initiating a hard fork on the 536,200 BTG block. The release from the Bitcoin Gold team member, Edward Iskra, noted that the upgrade changed the mining algorithm for BTG. With the algorithm changing from Equihash to an updated version of the aforementioned algorithm, fittingly named Equihash-BTG.

This upgrade is an attempt to keep ASICs away from the network, introducing a layer of ASIC-resistance that should stave off any attempts at centralizing BTG mining. Although successful so far, it is likely that ASIC manufacturers may pick up on the new Equihash-BTG algorithms moving into the future.  

The May BTG 51% Attack

Bitcoin Gold experienced a 51% attack in May, amongst growing fears of similar attacks on other blockchains. The double-spend attack saw $18 million worth of BTG being exploited by the malicious attackers, getting a nice payday from the attack.

According to analysis from the cryptocurrency community and BTG team, the 51% attack was a result of rented hash power, which may have consisted of ASIC miners. The new algorithm ensures that there is no rental market for Equihash-BTG miners, making the upgraded blockchain more secure.

Edward Iskra wrote:

The recent “51%” attacks, which may or may not have involved ASIC miners, were channeled through hashpower rental markets – but with this change in algorithm, there’s no longer a rental market for the algorithm we’re using, and it’s harder to set one up than before. This means more safety.

Additionally, this hard fork also introduces a new difficulty adjustment system, ensuring that the BTG blockchain is responsive to large hash power shifts.

LWMA, the improved difficulty adjustment algorithms, allows for the better stabilization of block times, assuring that a new block gets pushed out approximately every 10 minutes after a hashrate swing. Iskra chalked up this change to the auto-switching method which miners enlist to receive the most mining profits.

The release stated:

Our improved algorithm will help the blockchain adjust more quickly, providing a steadier flow of blocks.

Rising Bitmain Power On New Algorithms

Bitmain is one of the most influential companies in the cryptocurrency space, reportedly generating over $3 billion in profits in 2017 alone. The ASIC manufacturer historically built ASICs for the SHA-256 and Scrypt algorithms, or for Bitcoin and Litecoin respectively. However, Bitmain has recently started creating new ASICs for algorithms that were previously ASIC-resistant, algorithms like Equihash and EthHash. 

These news ASICs have begun to affect Equihash and EthHash blockchains, such as ZCash and Ethereum. GPU miners who contribute hash power to these blockchains have been seeing declining profits, with ASICs easily outperforming graphics card rigs.

Ethereum and ZCash have abstained from forking away from ASICs, leading to an environment where GPU miners have had to bow out of mining pools. This will only help Bitmain hold its monopoly on the cryptocurrency mining industry, which lacks competitors to this ever-growing ASIC giant.

Title Image Courtesy of Rebcenter-Moscow

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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 Blockchain.info 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.

Crypto

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.

Equipment

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.

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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.

GigaWatt

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.

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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.

Pic3

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.

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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.

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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.

Pic6

Image source: SRF.ch
 

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, Slavorum.org states.

Pic6

Image source: Lazy-flyer.livejournal.com

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.

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Nvidia Racks Up 300,000 Overstock GPUs As Mining Interest Dwindles

Nvidia-According to an article from Gadgets360, a popular technology media source, an over 300,000 GPU return was the result of a ‘top 3’ Taiwan OEM realizing the lack of demand in the computer hardware market.

Some have suggested that the recent influx of overstock GPUs will lead to a delay in the release of a new lineup of Nvidia cards, originally expected to arrive in Q2/Q3 2018. This would make sense, as Nvidia would want to sell all of the cards in their 10 series before making any large moves towards new hardware. If the aforementioned reports are accurate, Nvidia’s overstock can be worth over one hundred million dollars at MSRP prices.

The rumored 11 (Ex. 1180) series cards have become an important topic of discussion in the technology and cryptocurrency communities. Both groups believe that the performance of these new cards will easily overpower any of the GPUs from the previous series.

Nvidia Refocuses on Gaming As GPU Mining Slows

However, Nvidia has begun to quash the hopes of GPU miners, by announcing that they will begin to refocus on gaming, instead of the immense profits produced by the GPU mining sub-sector.

Jensen Huang, Nvidia’s CEO, said:

We’re working really hard to get GPU down to the marketplace for the gamers and we’re doing everything to advise retailers and system builders to serve the gamers. And so, we’re doing everything we can, but I think the most important thing is we just got to catching for supply.

Nvidia revealed that revenues from the cryptocurrency industry amounted to $289 Million, nearly 10% of all reported revenue streams. Although this figure represented a substantial amount of sales, Jensen expects a ⅔ decrease in cryptocurrency demand over Q2.

With Q2 coming to a close shortly, it is clear to see that GPU demand has gone down, but exact numbers are still unclear. Many have attributed the mining demand slow-down to decreasing cryptocurrency prices, along with the rise in prominence of ASIC miners.

Firstly, cryptocurrency prices have declined over 70% since the start of the year, with mining difficulty still rising. This has led to an unsustainable market for GPU miners, with many users reporting a large loss in mining profitability. A select few, who live in areas where power costs exceed average levels, have begun to shut down their mining farms entirely, as profitability goes out the window.

GPUs Lack Efficiency When Compared To New ASICs

Secondly, Bitmain has recently announced their expansion into new mining algorithms, unexpectedly releasing ASICs for ETHhash and Equihash. Coins mined on the two aforementioned algorithms have historically been mined on GPUs, with Ethereum and ZCash being the most popular cryptocurrencies on these algorithms.

The new ASICs, titled the E3 and Z9 Mini, produce an exponential increase in the hashrate/$ performance metric. Ethereum and ZCash were originally expected to hard-fork away from any ASIC miners, however, developers have been slow to make any moves towards ASIC resistance. As the aforementioned ASICs arrive at the homes of miners, mining difficulty will begin to rise to new heights, heights where GPU miners will be unable to reach.

The GPU mining market is in a precarious situation, as profits slow. Nvidia has begun to acknowledge this, with analysts expecting a similar situation to occur with another hardware manufacturer, AMD.

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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.”

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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.

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Nvidia CEO: GPU Production Boost Needed Because of Crypto Miners

Nvidia must increase its production of graphics processing units (GPUs) to address a shortage caused by cryptocurrency miners, said the company’s chief executive on Monday.

The California-based company’s GPUs are highly sought after by both gamers and crypto miners due to their parallel processing power – and the surge in crypto mining has made it difficult for gamers to get their hands on the products, said Jen-Hsun Huang, who is also the company’s co-founder, during an interview with TechCrunch.

He noted that:

“We’re sold out of many of our high-end SKUs, and so it’s a real challenge keeping [graphic cards] in the marketplace for games … we have to build a whole lot more … We’ve got to come closer to the demand of the market. And right now we’re not anywhere near close to that and so we’re just going to have to keep running.”

The demand comes – at least partly – from the decentralized nature of cryptocurrencies, Huang explained.

He told TechCrunch that “at the highest level the way to think about that is because of the philosophy of cryptocurrency – which is really about taking advantage of distributed high-performance computing – there are supercomputers in the hands of almost everybody in the world so that no singular force or entity that can control the currency.”

Despite the GPU shortage, crypto miners still comprise only a small portion of Nvidia’s total business, Huang said in the interview.

Last month, Huang noted that “crypto … is not going to go away” during an interview with Barron’s. At the time, Nvidia announced that its revenue from cryptocurrency miners had beaten expectations, though chief financial officer Colette Kress minimized the impact miners actually had during an earnings call.

Jen-Hsun Huang image via Nvidia Taiwan / Flickr

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