A leading Wall Street research firm has slashed price targets for leading chipmakers Nvidia and AMD, claiming that it has received confirmation that cryptocurrency mining hardware manufacturer Bitmain has begun producing Ethereum ASIC miners.
On Monday, writing a note to clients, Susquehanna analyst Christopher Rolland said that the firm had recently confirmed that the China-based Bitmain will soon ship the first miners compatible with Ethash, the Proof-of-Work (PoW) hashing algorithm used by Ethereum and a lot of other cryptocurrencies.
Rolland added that at least three other companies working on Ethereum ASICs, all at various stages of development.
Since ASIC chips are application-specific, they maximize the efficiency of cryptocurrency mining but are useful for little else. Until now, Ethash had been ASIC-resistant, allowing Ethereum and other similar cryptocurrencies to be mined using the general purpose GPU chips commonly found in gaming computers.
Being the leaders in what is effectively a GPU manufacturing duopoly, Nvidia and AMD each benefited greatly from last year’s cryptocurrency price boom, which had a correlative effect on mining. In fact, a lot of investors treated these two companies as “proxy stocks” for the cryptocurrency area.
While the release of an Ethereum ASIC miner may not cause mining-related demand for GPUs to evaporate it could have a noticeable effect on AMD’s revenue in particular.
Susquehanna has reduced its price target for AMD shares to $7.50 from $13 and Nvidia shares to $200 from $215.