Nvidia: RBC Sizes the Market for Mining Crypto-Currencies

RBC Capital’s Mitch Steves today comebacks to the topic of Nvidia (NVDA) and crypto-currencies, something he explored te two research lumps earlier this week.

Te the report, Steves raises his price target on Nvidia shares to $175 from $150, to reflect ",gegevens center confidence,", he writes, and ",potential upside to overeenstemming estimates.",

Steves’s note is one of several te just the past duo of days. Nvidia shares today closed down $Ten.34, or 6.5%, at $149.60, kasstuk both by the general sell-off ter the stocks, and by a negative report from famous short-selling rock-hard Citron Research.

Steves’s very first chunk, on Tuesday, used the computations of the crypto-currency Ethereum spil a kleuter of thought exercise to display how Nvidia’s power efficiency te its GPU chips could be a competitive advantage.

He followed with a chunk the next day that sought to set the record straight on what Steves believes are misconceptions about Nvidia and Advanced Micro Devices’s (AMD) chips’ use te Ethereum and Bitcoin.

Today’s missive ponders the question of whether such “mining” crypto-currrencies is a “billion-dollar” market, or zero.

He comes up with $875 million spil the market for mining Ethereum with GPU chips, after calculating likely workloads for Nvidia and AMD chips.

Here’s the basic facts he used to arrive at that estimate:

The number of Ethers issued vanaf day is 28,800 (Ten.512M vanaf year), which suggests that the theoretical revenue chance is $Two.628B (annually) at a price of $250 vanaf Ether If wij assume that each miner wants to make a 100% comeback on his investment, this would mean the total dollars spent to create mining equipments would come ter at $1.314B GPUs represent approximately 66% of the cost of a standard $Two,000-3,000 mining equipment This would result ter a GPU chance of

$875 million (Two.92M GPUs at $300 ASP) Eventually, wij note that this is only for Ethereum. If other crypto currencies become profitable (mining for Zcash or other currencies) the chance would be larger To re-emphasize, the assumptions do not reflect the reality of Ethereum long-term. The amount to be mined will be vapid and the algorithm is set to switch (see question #Two Could the TAM Go Away?).

Those numbers are summarized te the table introduced at the top of this postbode.

There are other currencies, and there are other contraptions, such spil application-specific integrated circuits, or “ASICs,” spil he discusses at some length. The more general response for the GPU offerings is that, ",spil long spil GPU mining is profitable request should proceed to exceed supply,” te Steves’s view. Right now, mining Ethereum is profitable, he notes.

It could all “drop to zero” if crypto-currencies plummet ter value to the point where it’s uneconomical to spend the thousands needed for a equipment to mine them, he writes.

For those not ter the know, such a equipment costs $Two,000 to $Trio,000 and is made up spil goes after:

The component costs pauze down harshly spil goes after: GPU cost 66%, RAM 1%, SSD 2%, Power Supply 10%, Motherboard/CPU 14%, Case/Cables/Ventilatoren 6%. Ultimately, you’ll need an operating system (such spil Windows) along with a mouse/monitor to install the necessary software.

Even however AMD chips are the top product for acquiring Ethereum according to Steves, he makes the case for Nvidia chips if AMD prices proceed to sell significantly above retail prices:

What GPU is Best for Mining Ethereum? The quick reaction is: AMD. If an individual can acquire an AMD GPU at retail price the comebacks are the highest. The punt today is that AMD Rx 580s are being sold at a premium to retail prices today – out of stock. This creates a significant kwestie spil 1) the longer a person voorwaarde wait the less likely the miner will be able to turn a profit (potential decline te block size, potential algorithm switch etc.) and Two) a common mining equipment requires

4-6 GPUs multiplying the kwestie of both cost and time.

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