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.

Zuckerberg Says Libra Can Boost Facebook's Ad Revenue, China Sees It as a Much Bigger Deal

Facebook CEO Mark Zuckerberg has, during a shareholder meeting, explained how the Libra cryptocurrency project will help the social media giant make money. China, on the other hand, published a book addressing the challenges Libra poses, arguing it could become the future of world currency.

In a transcript posted by Thomson Reuters, we can read Zuckerberg replied to a question asked by a shareholder on how Facebook will be making money off of the Libra cryptocurrency project. Zuckerberg responded by going into Libra’s potential impact on e-commerce on Facebook, and its potential impact on advertising revenue.

According to the social media giant’s CEO, Facebook does not charge a set price for ads and instead works with a bidding system, where every business trying to advertise will bid to compete for ad space. The system, Zuckerberg said, allows them to get the “lowest possible price.”

He added that combining ads with an effective payment tool such as Libra can benefit businesses further as it could make commerce more efficient:

If we can make commerce be more effective for businesses if when they run an ad, somebody who clicks on that ad is now going to be more likely to buy something because they actually have a form of payment that works that’s on file.

Advertising on Facebook, as such, becomes more worthwhile for businesses, which could in turn see them bid higher on ads and increase overall ad prices. This would effectively boost Facebook’s 0s advertising revenue.

Zuckerberg also reiterated other advantages of Libra, pointing out the payments infrastructure “hasn’t been updated in a very long time.” China, which has plans to launch its own digital currency called DCEP, sees Libra as more than a way for Facebook to make money.

Libra Could Hit China’s Efforts to Increase Yuan Influence

In a book published by the Central Party School of China to educate government officials on digital currency and propose policy measures to deal with emerging challenges like the Libra project, experts argue the latter is an excellent example of a public-private partnership and has the potential to become the future of world currency.

This would mean, according to the book titled “Discussing Digital Currency with Leading Officials,” that Libra could get in the way of the Chinese government’s attempt to increase the influence of the yuan.

Hongzhang Wang, former chairman of the China Construction Bank and one of the authors on the book’s preface, said in a recent article:

China originally relied on mobile payment to get ahead, but now Libra has the potential to change the game again.

Wang added that this would allow companies in the U.S. to build a digital currency system that could “threaten or even surpass” Alipay and WeChat Pay using blockchain technology.

Featured image via Unsplash.