A Look At Chipmakers In The Wake Of The Ethereum Merge. Is There Still Demand For Graphics Cards?

A Look At Chipmakers In The Wake Of The Ethereum Merge. Is There Still Demand For Graphics Cards?

Considered the world’s most actively used blockchain network, Ethereum (CRYPTO: ETH) has successfully transitioned from a mining and energy-intensive proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) model that replaces miners with validators.

Dubbed as The Merge, this move has been touted to help improve Ethereum’s scalability, reduce its energy requirements and make its entire ecosystem more secure.

However, the elimination of the need to mine Ethereum will undoubtedly impact the overall global graphic processing unit (GPU) demand, casting doubt over the future growth potential of chipmakers like NVIDIA Corporation (NASDAQ: NASDAQ:NVDA), Advanced Micro Devices Inc. (NASDAQ: NASDAQ:AMD) and others.

Delving into Nvidia’s quarterly results to understand the revenue share of GPUs in its overall business does paint a less extreme picture than what is being surmised.

ETH upgrade to impact NVIDIA revenue:

Lian Offering a viewpoint on how Ethereum’s transition will impact NVIDIA and other chipmakers, thought leader and best-selling author Anndy Lian says, “The Merge will completely remove the need for miners, who are currently securing the Ethereum network. They will replace them with validators. This upgrade would lead to a big revenue miss for NVIDIA, whose stock was down by nearly 20% compared to the previous quarter, associated to a slowdown in the gaming business and weakness in the global markets.”

The impact of the change to POS would be reduced if the forked POW chains can keep their demand high, getting support from big miners and backed by strong communities who believe that POW is the core value.

“If this is executed properly with the support of companies like NVIDIA, this market push is likely to put these listed chipmakers in a much better position,” Lian adds.

The world leader in the discrete graphics card business, NVIDIA’s graphics business contributes to 58% of the company’s revenues and 62% of its operating income, according to Investopedia.

This includes the GeForce GPUs, GeForce NOW game-streaming service and solutions for gaming platforms provided by NVIDIA.

GPU market to post healthy growth

Despite the fact that sales for the GeForce GPU will be affected by the drop in GPU demand on account of Ethereum’s design change, analysts expect the overall GPU market to post healthy growth rates over the next five years due to strong demand from the gaming industry.

What is worrisome, however, will be the loss of pricing power that companies like NVIDIA enjoyed as long as the semiconductor chip shortage lasted.

With demand pressures and pricing challenges increasing, chipmakers like NVIDIA will need to aggressively focus on other verticals to maintain profit margins.

Echoing this sentiment, Raj Kapoor, Founder and CEO of India Blockchain Alliance says that Ethereum is not the only coin that mines decently on a graphics card and that Beam and Ravencoin are actually similarly profitable at this time, and even when ETH mining stops, those would still continue.

According to experts, post The Merge, crypto miners will be looking elsewhere for mining opportunities as long as there are other coins that will reward them for their effort.

“It is also possible that combined with the great crypto value crash of 2022, some miners decide to get out of the business altogether. Some may even try and make their own forked version of Ethereum, one that requires mining and no rules. We would probably see increased availability of second-hand GPUs that have been mined to bits as a result of the second-largest crypto moving away from mining,” Kapoor says.

He adds that with ETH’s move to PoS being in the cards for a long time, most miners will have planned ahead with alternative money-making endeavors.

Once the flooding of GPUs in the used market stops, GPU demand would revert back to previous levels, unless there is some other factor that reduces the overall demand.

With the increased usage of computers for entertainment and work purposes being a trend that will stay, eventually, all forces will balance out again.

As for companies like NVIDIA that are involved in the manufacturing and distribution of GPUs, they’re already bundling them with other products and exploring other business verticals to supplement their profits, he further says.

While the short-term effect of Ethereum’s shift to a PoS model will dent sales for NVIDIA and other chipmakers, the overall growth story for GPUs and allied services seems intact.

Moreover, as these companies expand their range of products and services into areas such as Artificial Intelligence (AI), their reliance on the crypto world will eventually fade away and will be replaced by Web3-focused consumer products in the near future.

 

Source: https://uk.investing.com/news/cryptocurrency-news/a-look-at-chipmakers-in-the-wake-of-the-ethereum-merge-is-there-still-demand-for-graphics-cards-2754422

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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A Look At Chipmakers In The Wake Of The Ethereum Merge. Is There Still Demand For Graphics Cards?

A Look At Chipmakers In The Wake Of The Ethereum Merge. Is There Still Demand For Graphics Cards?
ZINGER KEY POINTS
  • Ethereum blockchain has switched to a Proof-of-stake consensus model
  • The complete stoppage of mining Ethereum tokens will have a perceptible but temporary impact on leading chipmakers.

Considered the world’s most actively used blockchain network, Ethereum has successfully transitioned from a mining and energy-intensive proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) model that replaces miners with validators.

Dubbed as The Merge, this move has been touted to help improve Ethereum’s scalability, reduce its energy requirements and make its entire ecosystem more secure.

However, the elimination of the need to mine Ethereum will undoubtedly impact the overall global graphic processing unit (GPU) demand, casting doubt over the future growth potential of chipmakers like NVIDIA Corporation, Advanced Micro Devices Inc. and others.

Delving into Nvidia’s quarterly results to understand the revenue share of GPUs in its overall business does paint a less extreme picture than what is being surmised.

ETH upgrade to impact NVIDIA revenue: Lian

Offering a viewpoint on how Ethereum’s transition will impact NVIDIA and other chipmakers, thought leader and best-selling author Anndy Lian says, “The Merge will completely remove the need for miners, who are currently securing the Ethereum network. They will replace them with validators. This upgrade would lead to a big revenue miss for NVIDIA, whose stock was down by nearly 20% compared to the previous quarter, associated to a slowdown in the gaming business and weakness in the global markets.”

“If this is executed properly with the support of companies like NVIDIA, this market push is likely to put these listed chipmakers in a much better position,” Lian adds.

The world leader in the discrete graphics card business, NVIDIA’s graphics business contributes to 58% of the company’s revenues and 62% of its operating income, according to Investopedia.

This includes the GeForce GPUs, GeForce NOW game-streaming service and solutions for gaming platforms provided by NVIDIA.

GPU market to post healthy growth

Despite the fact that sales for the GeForce GPU will be affected by the drop in GPU demand on account of Ethereum’s design change, analysts expect the overall GPU market to post healthy growth rates over the next five years due to strong demand from the gaming industry.

What is worrisome, however, will be the loss of pricing power that companies like NVIDIA enjoyed as long as the semiconductor chip shortage lasted.

With demand pressures and pricing challenges increasing, chipmakers like NVIDIA will need to aggressively focus on other verticals to maintain profit margins.

Echoing this sentiment, Raj Kapoor, Founder and CEO of India Blockchain Alliance says that Ethereum is not the only coin that mines decently on a graphics card and that Beam and Ravencoin are actually similarly profitable at this time, and even when ETH mining stops, those would still continue.

According to experts, post The Merge, crypto miners will be looking elsewhere for mining opportunities as long as there are other coins that will reward them for their effort.

“It is also possible that combined with the great crypto value crash of 2022, some miners decide to get out of the business altogether. Some may even try and make their own forked version of Ethereum, one that requires mining and no rules. We would probably see increased availability of second-hand GPUs that have been mined to bits as a result of the second-largest crypto moving away from mining,” Kapoor says.

He adds that with ETH’s move to PoS being in the cards for a long time, most miners will have planned ahead with alternative money-making endeavors.

Once the flooding of GPUs in the used market stops, GPU demand would revert back to previous levels, unless there is some other factor that reduces the overall demand.

With the increased usage of computers for entertainment and work purposes being a trend that will stay, eventually, all forces will balance out again.

As for companies like NVIDIA that are involved in the manufacturing and distribution of GPUs, they’re already bundling them with other products and exploring other business verticals to supplement their profits, he further says.

While the short-term effect of Ethereum’s shift to a PoS model will dent sales for NVIDIA and other chipmakers, the overall growth story for GPUs and allied services seems intact.

Moreover, as these companies expand their range of products and services into areas such as Artificial Intelligence (AI), their reliance on the crypto world will eventually fade away and will be replaced by Web3-focused consumer products in the near future.

 

Source: https://www.benzinga.com/markets/cryptocurrency/22/09/28897739/comprehending-the-impact-of-eth-merge-on-nvidia-and-other-chipmakers

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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“Bitcoin miners cannot meet Grayscale Investments customer demand”/ “Майнеры Bitcoin не могут удовлетворить спрос клиентов Grayscale Investments”

“Bitcoin miners cannot meet Grayscale Investments customer demand”/ “Майнеры Bitcoin не могут удовлетворить спрос клиентов Grayscale Investments”

Thanks for quoting me on the article “Bitcoin miners cannot meet Grayscale Investments customer demand”/ “Майнеры Bitcoin не могут удовлетворить спрос клиентов Grayscale Investments”.

Adding on to what I have commented and quoted in this article.

“Greyscale Investments has doubled up their investment in Bitcoin. The company has bought 18.910 BTCs since 11 May 2020.

It is normal for an investment company to see the potential of Bitcoin, in fact, if they realised this earlier, the whole situation will be different.

I believe their daily investment from 607.62 BTCs to 1,112.35 Bitcoin is just the beginning. As the market builds more confidence for Bitcoin, their average daily will increase too.

Do bear in mind BTC’s supply is fixed and the demand is very strong. There may be an overflow of interest in other potential tokens too.”

Grayscale Investments is the world’s largest digital currency asset manager, with more than $2.2B in assets under management as of March 31, 2020. Grayscale’s investment products are available to institutional and individual accredited investors through their respective periodic and ongoing private placements. Grayscale’s single-asset investment products provide exposure to Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Ethereum Classic (ETC), Horizen (ZEN), Litecoin (LTC), Stellar Lumens (XLM), XRP, and Zcash (ZEC).

Through its family of 10 investment products, Grayscale provides access and exposure to the digital currency asset class in the form of a traditional security without the challenges of buying, storing, and safekeeping digital currencies directly. With a proven track record and unrivaled experience, Grayscale’s products operate within existing regulatory frameworks, creating secure and compliant exposure for investors. For more information, please visit www.grayscale.co.

You can read the full article in Russian at https://bloomchain.ru/newsfeed/majnery-bitcoin-ne-mogut-udovletvorit-spros-so-storony-grayscale-investments/

I have translated it in English  using Google Translate:

Bitcoin miners cannot meet Grayscale Investments customer demand

Grayscale Investments, which is part of the holding of millionaire Barry Silbert , after the May halving bought more than 18 thousand Bitcoin. Analyst Kevin Rook noted that the volume of investments of the asset management company is one and a half times the number of tokens mined by miners over the specified period of time.

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According to Ruka, miners have mined about 12,337 BTC since the third halving. During the same time, Grayscale-owned regulated cryptocurrency trust – Bitcoin Trust – acquired 18,910 BTC. It turns out that the trust buys 150% of all issued tokens. Rook also noted that after the halving, the company significantly increased the volume of average daily investments – from  607.62 BTC to 1112.35 BTC.

Changpeng Zhao , head of the Binance cryptocurrency exchange , has already noticed a Tweak tweet and noted that the demand for cryptocurrency exceeds supply. However, some community members feel that this is not good. For example, investor Andy Lian noted that the actions of Grayscale will lead to the appearance of another whale on the market, which will adversely affect the entire industry.

However, the increased activity on the part of the Bitcoin Trust is another indication that institutional investors do not share the position of the financial conglomerate Goldman Sachs, which opposed investments in cryptocurrency. Note that the crypto community has reacted quite rapidly to criticism of the investment bank. Users believe that his analysts were not able to appreciate the capabilities of this class of assets.

Grayscale Investments reports that as of May 27, 2020, the company managed assets with a total value of $ 3.6 billion. Moreover, most of these assets are accounted for precisely by Bitcoin Trust. He manages assets worth $ 3.2 billion – this is approximately 345,000 BTC at the current exchange rate, or almost 2% of all Bitcoin circulating in the network.

Recall that in the first quarter of 2020, Grayscale Investments attracted more than $ 500 million under its wing – this is almost as much as the company managed to attract for the entire 2019. Most of this money was invested in her bitcoin trust.

 

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Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

j j j