RBC Capitalit is Mitch Steves come back to the subject today Nvidia (NVDA) and cryptocurrenciessomething he explored in two research papers earlier this week.
In the report, Steves raises his price target on Nvidia shares to $175 from $150, to reflect “data center confidence,” he wrote, and “upside potential from consensus estimates.”
Steves’ note is one of many from the past few days. Nvidia shares today closed down $10.34, or 6.5%, at $149.60, hit by both the general stock sell-off and a negative report from a sell-off company. notorious discovery. Citrus Research.
Steves’ first article on Tuesday used cryptocurrency calculations Ethereum as a sort of thought exercise to show how Nvidia’s power efficiency in its GPU chips could be a competitive advantage.
He followed up with an article the next day that sought to set the record straight on what Steves considers to be misconceptions about Nvidia and Advanced micro-systemsthe use of chips (AMD) in Ethereum and Bitcoin.
Today’s missive questions whether these “mining” cryptocurrencies are a “billion dollar” market, or none at all.
It offers $875 million as the market for mining Ethereum with GPU chips, after calculating likely workloads for Nvidia and AMD chips.
Here are the basic facts he used to arrive at this estimate:
The number of Ethers issued per day is 28,800 (10.512 million per year), suggesting that the theoretical revenue opportunity is $2.628 billion (annually) at a price of $250 per Ether If we assume that every miner wants to make a 100% return on their investment, that would mean the total dollars spent on building mining rigs would be $1.314 billion. GPUs are about 66% of the cost of a standard $2000-3000 mining rig. GPU at $300 ASP) Finally, note that this is only for Ethereum. If other cryptocurrencies become profitable (mining Zcash or other currencies), the opportunity would be greater. To emphasize again, the assumptions do not reflect the reality of Ethereum in the long term. The quantity to be extracted will be fixed and the algorithm is ready to change (see question #2 Could the TAM disappear?).
These numbers are summarized in the table at the top of this article.
There are other currencies and other tools, such as application specific integrated circuits, or “ASIC”, as he talks about it at length. The more general answer for GPU deals is that, “as long as GPU mining is profitable, demand should continue to outstrip supply,” according to Steves. Currently, Ethereum mining is profitable, he notes.
Everything could “fall to zero” if the value of cryptocurrencies plummets to the point that it is not profitable to spend the thousands of dollars needed for a platform to mine them, he writes.
For those who are not in the know, such a rig costs $2,000-3,000 and consists of the following:
Component costs roughly break down as follows: GPU cost 66%, RAM 1%, SSD 2%, power supply 10%, motherboard/CPU 14%, case/cables/fans 6%. Finally, you will need an operating system (such as Windows) as well as a mouse/monitor to install the necessary software.
Even though AMD chips are the best product to acquire Ethereum according to Steves, he makes the case for Nvidia chips if AMD prices continue to sell significantly above retail prices:
Which GPU is best for mining Ethereum? The quick answer is: AMD. If an individual can acquire an AMD GPU at retail price, the returns are the highest. The problem today is that the AMD Rx 580s are being priced above retail prices today – out of stock. This creates a significant problem because 1) the longer a person has to wait, the less profit the miner will be able to make (potential block size decrease, potential algorithm change, etc.) and 2) a platform Common mining requires ~4-6 GPUs compounding the cost and time issues.