GPU sales to crypto miners on the decline, but manufacturers aren’t worried

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The graphics processing unit (GPU) market is about as volatile as the cryptocurrency market. Following a boom that saw major GPU manufacturers such as AMD and Nvidia seeing exaggerated high sales, the market has now cooled off somewhat. The peak came as the cryptocurrency market achieved a high of $830 billion, but has now fallen into a valley on the latest drop in the market.

GPUs are a prime component in computers for mining cryptocurrencies. As the crypto market rose last year, there was a run on GPUs that extended through the first quarter of this year and the manufacturers had a hard time keeping up with the demand.  Nvidia reported revenue of around $3.21 billion for the first quarter, of which $289 million, or 9%, came directly from mining equipment sales. AMD saw its first-quarter revenue reach $1.65 billion and said that 10% came from the GPU market.

Despite the substantial mining growth, GPU manufacturers don’t want it to continue. They argue that the GPUs are better served by gamers and researchers, as opposed to miners. Nvidia’s CEO, Jensen Huang, was quoted in a recent interview saying, “The reason why they bought [GPU cards] is for gaming, but while they are not gaming; while they are at school, at work, or in bed—they will turn it on and do a little mining. There’s nothing wrong with that.”

Both Nvidia and AMD have indicated that their GPU sales to miners will fall over the next several months. However, it isn’t due to a plunging market but, rather, more competition. Bitmain, a manufacturer of application-specific integrated circuit (ASIC) mining equipment, recently announced an ASIC miner for Ethereum. Dubbed the Antminer E3, there’s a good possibility that it will make GPU miners obsolete.

Bitmain has already secured a place in the mining community. While Nvidia earned $3 billion across its entire line of products last year, Bitmain reported an operating profit of almost $4 billion—from only its ASIC miners.

Lisa Su, CEO of AMD, anticipates a drop of two-thirds in mining-related equipment. She isn’t worried, however, and calls the drop healthy for AMD. “I do think the blockchain infrastructure is here to stay. I think there are numerous currencies,” she explained. “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.”