Advanced Micro Devices (AMD) wowed Wall Street Wednesday (July 26) after posting news of a strong showing in its second quarter. What’s notable about its results is that the upside wasn’t driven by the personal computer market or a need for gamers to get the latest graphic processing chip but rather demand from the mining of the virtual currency bitcoin. People mining for cryptocurrency need high-end graphic processors which AMD sells.
For weeks now shares of AMD have been surging as the prices of cryptocurrency such as bitcoin and ethereum surged. That, in turn, drove demand by regular people to mine bitcoins, which in turn resulted in AMD’s high-end graphic processors cards selling out.
For its second quarter, the chip maker reported better than expected results mainly because of that. “AMD turned in a solid beat … and consensus estimates as the company’s new Ryzen desktop CPU ramped into production and GPU demand outstripped supply,” Stifel Analyst Kevin Cassidy wrote in a note to clients that was covered by CNBC. “While management wasn’t specific on how much, the GPU revenue upside was driven by cryptocurrency applications.”
AMD isn’t the only chip company that is seeing strong growth thanks to the new era of bitcoin mining demand. Nvidia, another graphic chip card maker, has seen its products sell out and its shares rise as a result.
As CNBC noted in the report, the Ethereum virtual currency is more than 2,400 percent higher so far this year, while bitcoin is up about 160 percent so far in 2017. Since June, AMD has been talking about the red hot demand all thanks to the mining of cryptocurrency. In June, computer hardware stores had sold out of its newest graphic processors.
Mining of cryptocurrency was also a big focus of the company’s earnings call late Tuesday (July 25), with Wall Street analysts peppering the company with questions about the size and sustainability of cryptocurrency mining demand. There are concerns that if the prices of the cryptocurrency decline, demand for both AMD and Nvidia’s graphic cards will decline as less people mine coins.