AMD’s 30% Crash: Manufactures Report Loses Due to Reduced Demand for Crypto Mining Gear

TL;DR

• Due to the drop in the value of cryptocurrencies throughout 2018, as well as high prices of mining chips, the manufacturers have noticed a significant decrease in GPU sales.
• Apart from a drop in orders and sales, mining gear makers also reported the lack of new miners in a recent period.
• As a result, the revenue of some of the largest chip-making firms declined significantly and is far below the expectations. This includes AMD’s current 30% price drop.

The crypto boom of late 2017 has brought cryptocurrencies to the attention of the entire world and public. Considering how significant the role of crypto mining is for digital coins, this industry experienced substantial growth as well.

Numerous chipmakers prospered ever since, with a lot of technology firms expanding to include the creation of mining chips and similar equipment. However, throughout 2018, cryptocurrencies continued to drop in value, which reflected not only on the crypto industry but recently the traditional markets had joined.

Mining gear manufacturers are losing revenue

Mining gear makers were the next to be affected, while many of them lately announced losses in revenue. This was recently confirmed by AMD (Advanced Micro Devices Inc), which has seen its expected revenue of $1.6 billion dropping to around $1.45 billion. As of writing these lines, AMD is expected to open it’s NASDAQ trading with a 20% slide, 30% accumulated in the recent two days of trading.

While this is a significant drop in earnings, the company also saw the price of its shares drop by 22%. A similar situation troubles numerous other companies, such as AMD’s main rival, Nvidia whose shares dropped by 2.5% in Q4 2018.

Nvidia has reported a drop in GPU sales back in August 2018, merely stating that “Crypto mining has dried up.” Similar reports came from Taiwan Semiconductor Manufacturing, the largest chip giant. Initially, they predicted a growth rate of sales to be 7% to 9%. However, it appears that the growth rate will be 6.5% at its best.

The decline also troubles Samsung, which is among the firms that have expanded its production, especially for crypto chips earlier this year.

No new players in the miner’s industry

Many believe that the demand has dropped due to high prices of mining gear, especially since the necessary gear to mine Bitcoin tends to require a fortune to obtain. However, this is likely not the only reason, as a lack of new miners was also noted in later parts of 2018. By going deeper into exploring this phenomenon, it all comes back to cryptocurrency implosion. With crypto value dropping and the prices of gear and other resources continuing to grow, new would-be miners are discouraged from following up on their plans to join the mining industry.

While many believed that President Trump’s trade tariffs imposed on China might increase the sales, it would seem that this will not be the case due to sheer lack of interest in mining. The only real way for the situation to change is another bull run that will reawaken the interest in cryptocurrency and, as an extent, in mining.