Wall Street analyst: Cryptocurrency price surge could boost GPU sales

Rage Comment : The ups and downs of the cryptocurrency market have made more people aware of them and have participated in mining and investment. Recently, the price of cryptocurrencies has continued to break records, driving up GPU sales. However, analysts believe that the corresponding market demand will rise and fall with the currency market. However, with the advancement of technology and the increase in investors, the specific trend is difficult to predict.

Translation: Annie_Xu

Rising prices for Ethereum, Monero and other cryptocurrencies could boost sales for GPU makers, according to Wall Street analysts.

In a weekend research note to clients, Mitch Steves of RBC Capital Markets said recent double-digit gains in some cryptocurrency prices could lure miners into the market, pushing older miners to buy new GPUs to increase capacity.

Mining is the energy-intensive process by which new transactions are added to the blockchain, and has been reported in the news as a major sales boost for companies such as Nvidia and Advanced Micro Devices.

Steves wrote:

“We are focusing on it now because the payback period has shortened significantly, which could lead to continued momentum in GPU sales related to cryptocurrency mining.”

“To put that into context, when the price of Ethereum was $300, the payback period was about 9.4 months; now it’s about 5.6 months, and we see that change is significant.”

When Ethereum bottomed out at $286 in early November, it rebounded to $453, a 58% gain over the weekend. Monero prices nearly doubled in a month, from $82 to $161, while Zcash rose 49% in November, from $213 to $318.

The rebound in mining demand is noteworthy because many observers, including Nvidia and AMD, the main manufacturers of GPUs used in mining, predicted weeks ago that the increase in cryptocurrency mining and GPU sales would begin to slow after the amazing sales figures released in the first half of this year and the depletion of inventories.

In its third-quarter earnings report, Nvidia noted that mining-related GPU revenue had fallen from $150 million in the second quarter to $70 million, and predicted that the trend would continue. AMD CEO Lisa Su also expressed the same idea to investors at the third-quarter conference, saying that "some demand for cryptocurrencies will gradually flatten out."

Some impacts may no longer be so certain, Steves said.

While noting that it’s too early to assess the long-term stability of the market, Steves said it’s likely due to a combination of technological advancement and traditional investors becoming interested in mining.

"To put it in a 'the secret is out' sense, we won't be surprised to see more and more institutional money and high net worth individuals investing in this rapidly growing sector."