By Josiah Wilmoth
Share prices for chipmakers AMD and Nvidia could face a reckoning in coming months as the cryptocurrency mining industry awaits the release of the first Ethereum ASIC miner.
Though the GPU manufacturing duopoly primarily serves computer gamers, it has seen a steady uptick in sales related to cryptocurrency mining, and Nvidia CEO Jensen Huang has said that he believes mining will be an “important driver” for GPU demand in the future.
A wide variety of cryptocurrencies are mined using GPU chips, but the most popular is Ethereum – the second-largest cryptocurrency by market cap.
As Strategic Coin reported, Beijing-based mining hardware manufacturer Bitmain announced earlier this week that it had developed the Antminer E3 – an Ethereum ASIC miner that promises to alter the face of Ethereum mining forever.
The Antminer E3 is the first Application Specific Integrated Circuit (ASIC) miner compatible with Ethash, Ethereum’s the Proof-of-Work (PoW) consensus algorithm. These miners are significantly more efficient than GPU miners, but critics say they are less egalitarian since the components must be purchased from a small group of manufacturers, whereas GPUs are available from any computer hardware supplier.
According to Bitmain, the Antminer E3, which can be pre-ordered for $800 and will be shipped in July, can achieve 180 MH/s. At present, miners would have to pay approximately $1,600 for a GPU miner with comparable specifications, analysts at RBC Capital Markets wrote in a note to clients.
Moreover, the Ethereum community itself is currently debating whether to alter its implementation of Ethash to render BItmain’s ASICs obsolete, even as it continues to work toward implementing a consensus algorithm in the future that will no longer require mining for network security.
While many other cryptocurrencies can still be mined with GPUs, the loss of Ethereum miners will deal a serious dent into the GPU manufacturing duopoly’s still-nascent miner client base.
Consequently, if Ethereum ultimately decides not to take action against the development of the first Ethereum ASIC miner, AMD and Nvidia could find their share prices have much less short-term upside.
Featured Image from Pixabay