The current state of the cryptocurrency mining rush is in a delicate state. The values of Bitcoin, Ethereum, and other smaller currencies have stalled out on the rocket-like trajectory they were on last month and have settled into a slower, more moderate cycle of growth. Last week I wrote a story that warned of a pending backfire for those betting heavily on the hardware portion of the mining craze, and I stand by the risk that AMD and NVIDIA must address as we prepare for the stabilization of mining difficulty that will make GPU-based usage models inefficient.
The early wave of sales spikes on graphics hardware were done at the previous pricing models but both AMD and NVIDIA are attempting to improve their return on cryptocurrency sales by raising GPU prices to partners in line with current market sales. Previously only the consumer facing resellers were seeing the advantages of the higher pricing, and it was only a matter of time before NVIDIA and AMD took their share. While in theory this might affect the MSRP for these parts in the GeForce and Radeon lines, in practice the current elevated prices will remain. Expect NVIDIA and AMD to lower their temporary price hikes when we see the demand for these cards die down.
In the last couple of days however, both AMD and NVIDIA add-in card partners began listing and selling mining-specific cards that separate themselves through reduced feature sets and lower pricing. NVIDIA is offering both GP106 and GP104 based hardware, equivalent to the mid-range GTX 1060 and high-end GTX 1070/1080 gaming cards, though without the branding to indicate it. Partners like ASUS, EVGA, MSI, and others are being very careful to NOT call these products by the equivalent GeForce brands, instead using something equivalent to “ASUS MINING-P106-6G”. To a seasoned miner, the name gives enough information to estimate the performance and value of the card but tells customers looking for gaming hardware that this one is off limits. Why? Many of these are being sold without display output connections, making them less expensive but nearly unusable for any purpose other than compute-based cryptocurrency mining.
AMD has partners offering similar options, some with and some without display output connectivity. The first wave are based on the Radeon RX 400-series of GPUs rather than the current RX 500 products.
These new offerings allow both AMD and NVIDIA to take advantage of the mining market to sell an otherwise untenable product. For AMD, after the launch of its RX 500-series of cards in April, any inventory of the RX 400-series needed to be sold at steep discounts or risk being held in warehouses for months. By targeting these products to mining directly, where they are still among the most power and dollar efficient for the workload, AMD can revive the product line without sacrificing as much of the price.
In other cases, for both AMD and NVIDIA, the ability to sell head-less graphics boards (those without display connectivity) offers the chance to sell GPUs that might have otherwise been sent to recycling. As silicon is binned at the production facility, any GPU without fully operational display engines would be useless to sell to a gamer but can operate as part of a cryptocurrency mining farm without issue. This means better margins, more sales, and overall more efficient product line moving forward.
Producing mining-specific cards should also benefit AMD and NVIDIA in the longer view, assuming they can make and sell enough for it to be effective. Because headless GPUs are not useful to the gaming community, they cannot be a part of the flood of products into the resale market to impact the sales of legitimate, newer gaming hardware from either party. This dampens the threat to GPU sales in the post-mining bubble, but only to the degree that AMD and NVIDIA are successful in seeding this hardware to the cryptocurrency audience.
The quantity of these parts is the biggest question that remains. Initial reports from partners indicate that only a few thousand are ready to sell, and mostly in the APAC market where the biggest farms tend to be located. But I am told that both vendors plan to ramp up this segment rather quickly, hoping to catch as much of the cryptocurrency wave as possible. AMD in particular has extended its Polaris GPU production through Q1 of 2018, a full quarter past original expectations. This is partially due to the outlook for the company’s upcoming high-end Vega architecture but also is a result of the expected demand for GPU-based mining hardware this year. AMD appears to be betting heavily on the mining craze to continue for the foreseeable future.