Morgan Stanley Predicts 2018 Plunge in GPU Mining Sales

Cryptominers will likely purchase fewer graphics cards in 2018 as ethereum's hard forks make mining a less profitable exercise.

AccessTimeIconNov 14, 2017 at 7:20 p.m. UTC
Updated Sep 13, 2021 at 7:09 a.m. UTC

An analyst for Morgan Stanley is predicting that the sale of graphics cards (GPUs) for cryptocurrency mining will fall next year, signifying a potential hurdle for sellers like AMD.

Joseph Moore, according to coverage from Barron's and Benzinga, suggested in a new report published this week that a mixture of network upgrades – including a decline in the overall block reward on the ethereum network from 5 ETH to 3 ETH – would have a tangible impact on miners, who engage in an energy-intensive process to create new transaction blocks.

As a result, according to Morgan Stanley, companies such as AMD could see their mining-related sales plunge by as much as 50% next year.

Moore wrote:

"We believe that total graphics sales for ethereum mining in 2017 will be $800 [million] or so, and will decline by 50% in 2018; we can validate the 2017 number by looking at the increased complexity of the algorithm. Unless ethereum prices rally, downside variance to our 2018 forecast is more likely than upside."

The Morgan Stanley analyst first wrote about AMD's potential graphics card sales issues two weeks ago, downgrading its rating from "equal-weight" to "underweight." He argued that while the company had gained some added profits due to the cryptocurrency mining community, this revenue would not last.

In his analysis, he wrote that "we expect cryptocurrency [mining] to gradually fade from here," noting that he expects video game consoles and graphics demands in general to decline in 2018 as well.

AMD saw its revenue grow 19 percent due to the popularity of its latest graphics cards, according to a previous CoinDesk article. Competitor Nvidia also saw a significant revenue boost thanks to GPU buyers who are using them to mine cryptocurrencies.

GPU mining image via Shutterstock

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