AMD Expects “Near Zero” Revenue From GPU Sales to Crypto Miners

Omar Faridi
  • AMD, one of the world’s largest computer chip manufacturers, expects “near zero” revenue from the crypto and blockchain sector.
  • AMD’s crypto-related revenue skyrocketed earlier this year, but may be down now due to the declining prices of cryptocurrencies

Advanced Micro Devices, Inc. (AMD), a leading multinational computer chip manufacturer, recently stated that its revenue from the crypto and blockchain sector will likely be “near zero” in Q3 2018. This, after AMD’s earnings from the crypto industry skyrocketed earlier this year, primarily due to the rising demand for graphics cards used in mining cryptocurrencies.

AMD’s CEO Lisa Su commented on the chipmaker’s expected decline, by noting that:

For Q2, we were approximately 6% of revenue for blockchain. For Q3, we’re planning very little blockchain.

Lisa Su

Declining GPU Sales

A drop in the sales of AMD’s graphics cards (GPUs), which are used to mine various digital currencies, could partially be attributed to a substantial decline in the market capitalization of the crypto market. Notably though, the price of most cryptocurrencies has recently begun to rise again, with Bitcoin (BTC) currently trading at above $8,100.

Notably, the flagship cryptocurrency dropped below $6,000 toward the end of June, and is currently down nearly 40% from its all-time high of nearly $20,000, according to data from CryptoCompare.

Despite the expected decline, AMD added that revenue from its newly-designed Ryzen processors and large data centers should make up for the losses. The chipmaker's chief financial officer (CFO) Devinder Kumar noted that "graphics revenue was down primarily driven by blockchain sales partially offset by stronger data center sales."

Kumar also pointed out that AMD introduced "Forty-four consumer and commercial Ryzen-based desktops and notebooks" this year. He added that the company expects to launch "a total of 60 Ryzen-based systems" by the end of 2018, in order to meet consistent customer demand. Per AMD’s executives, this should help generate a sizable revenue for the multinational firm during Q3 2018.

A Crypto-Driven Correction

Notably, the multinational investment bank UBS issued a warning in April on the falling prices of cryptocurrencies, noting these could result in a substantial revenue loss for AMD, even more so than its competing chipmaker Nvidia. UBS had also stated that Nvidia's revenue streams consisted of "its coin mining SKU so AMD would be net/net more exposed to a crypto-driven correction in the GPU market."

Back in February, CryptoGlobe reported that cryptocurrency miners had been increasingly buying graphics cards made by AMD and Nvidia. In fact, online retailers were quickly running out of stock due to a large number of orders for GPUs.

Huge Milestone for Ripple: MoneyGram to Use XRP-Based xRapid for Cross-Border Payments

Californian FinTech company Ripple and MoneyGram, one of the world's largest money transfer companies, are now strategic partners, which means that MoneyGram will be using Ripple's xRapid product as part of its "cross-border payment process."

According to the terms of this deal, Ripple will make an initial investment of $30 million in MoneyGram by acquiring shares at a price of $4.10 per share (or roughly three times the market value). During the next two years, MoneyGram has the option to make Ripple invest another $20 million (again, paying $4.10 per share).

As previously announced by Ripple, MoneyGram was testing xRapid as early as January 2018 so that it could understand how it could XRP in its payment flows for enabling on-demand liquidity for global payments. 

This will be by far the largest ever real world use of xRapid ("a solution for on-demand liquidity, which reduces reliance on pre-funding by enabling money to be sent from one currency and instantly settled in the destination currency") in production. xRapid uses XRP, which is the "native digital asset of the XRP Ledger", as a "real-time bridge between the sending and receiving currencies." 

According to the blog post Ripple published yeterday, Alex Holmes, the Chairman and CEO of MoneyGram, said:

“As the payments industry evolves and matures, it’s imperative that we continue to improve our platform and provide the most effective solution to get funds from point A to point B. Through Ripple’s xRapid product, we will have the ability to instantly settle funds from US dollars to destination currencies on a 24/7 basis, which has the potential to revolutionize our operations and dramatically streamline our global liquidity management.”

Currently, MoneyGram is using foreign exchange markets to handle settlement, which means that it needs to buy most currencies in advance. As a result of this partnership, MoneyGram should be able to "settle key currencies and match the timing of funding with its settlement requirements reducing costs, improving its balance sheet efficiency and reducing risk."

Brad Garlinghouse, the CEO of Ripple, had this to say:

“This strategic partnership will enable MoneyGram to greatly improve its operations and enable millions of people around the world to benefit from its improved efficiency. This is a huge milestone in helping to transform cross-border payments and I look forward to a long-term, very strategic partnership between our companies."

The Ripple CEO told Fortune:

“This will eliminate the need to deploy foreign bank accounts. That’s why MoneyGram has negative working capital. It will help customers and also smooth out their treasury operations."

As for Larry Angelilli, the Chief Financial Officer of MoneyGram, he stated:

"We are very pleased with the terms of the Ripple investment which supports the Company with permanent capital and additional liquidity. This partnership also provides MoneyGram with the opportunity to improve operating efficiencies and increase earnings and free cash flow."