Advanced Micro Devices, Inc. (AMD): Watch Out! Bitmain Officially Announced Ethereum ASIC


Unfortunately for Advanced Micro Devices, Inc. (NASDAQ:AMD) investors, Bitmain officially announced yesterday their Antminer E3 powered by a new Ethererum ASIC. The units are expected to ship sometime between July 16 – 31, 2018. Pre-orders were sold out within minutes. The new Ethereum ASIC miner consumes just 800W of power, and with an $800 price tag and 180MH/s of hashing power, this will put a dent in GPU-based mining.

What does this have to do with AMD? According to recent report, as much as 20% of AMD’s sales are generated by Ether miners buying a graphics card. The introduction of an Ether-specific ASIC may see a significant portion of these miners building new operations around that chip rather than a GPU, which could, in turn, lower demand for AMD cards. The result of lower demand would be a retreat from the inflated prices that have plagued gamers that have little to no interest in mining.

That said, last Tuesday the chip giant issued a statement stating that the amount it gets from crypto is far less:

As a reminder, on our Q4’17 earnings conference call we stated that the percentage of annual revenue related to Blockchain was approximately mid-single digit percentage in 2017. We had significant growth in the GPU business outside of Blockchain in Q4’17 as we ramped our Radeon Vega products, our GPU compute products, and our Apple business. We also spoke about strength across the rest of our business with AMD Ryzen and AMD EPYC product momentum. We have very compelling long-term drivers for the company including PCs, servers and graphics and our Q1 2018 financial guidance reflects that. We appreciate the time and attention that investors continue to pay to Blockchain and cryptocurrency, but would also like to keep it in perspective with the multiple other growth opportunities ahead for AMD.

AMD shares reacted to the news, tumbling nearly 4% to $9.16 in pre-market trading Wednesday.

Overall, Wall Street is torn when it comes to whether to sing AMD praises or assess with an apprehensive gaze, as according to TipRanks, out of 15 analysts polled in the last 3 months, 7 are bullish on the stock, 4 are sidelined, and 4 are bearish. However, with a potential upside of 57%, the stock’s consensus target price stands at $15.00.