Nvidia: This Bitmain Thing Has Morgan Stanley Worried

  • Order Reprints
  • Print Article
Bitmain's "Antminer" for cryptocurrency mining.
Text size

The news yesterday that startup Bitmain Technologies has unveiled a custom chip for “mining” cryptocurrencies continues to worry some analysts covering chip giant Nvidia (NVDA).

As mentioned yesterday, Mitch Steves of RBC Capital warned that Bitmain’s “Antminer E3” chip could lure away buyers of Nvidia’s “GPU” chips, which have for quite some time now been among the main chips used for mining currencies.

Evercore ISI’s C.J. Muse called such worries overdone this morning, but Morgan Stanley’s Joseph Moore is somewhat concerned.

Moore sees risk to both Nvidia and its only major graphics-chip competitor, Advanced Micro Devices (AMD). AMD has also benefitted from sales into the crypto market.

Moore writes of the Antminer chip, "While this was largely anticipated, the capability is slightly higher than our expectations, with hash rate 7.5x graphics cards at $800 price, and about 5.7x the power consumption."

He continues,

At today’s price/difficulty, such a system should generate about $6.25 in revenue per day (vs. $0.83 for a R580 graphics chip), offset by power costs of about $4, on average (vs. about $0.70 for graphics); hardware cost is roughly 2x graphics (per gpu), but with no resale capability vs. graphics cards which can be sold. The superior economics is likely to drive down mining profits for graphics chips (which were already under pressure), and likely signal the end of the crypto graphics shortage by mid year, a tactical negative for AMD (and to a lesser extent NVDA), though both companies have other areas growing quickly.

Moore maintains an Overweight rating on both Nvidia and AMD.

Nvidia shares today closed up 89 cents at $226.24. AMD stock ended the session up 22 cents, or 2%, at $9.77.
