As interest in cryptocurrency mining sparks GPU shortages, leads shares of GPU vendors to be upgraded and spawns articles on how to create a cryptocurrency mining rig, it's worth taking a trip down memory lane.

In late 2013, skyrocketing prices for Bitcoin and a sister currency known as Litecoin led to major shortages of AMD Inc. (AMD) GPUs that were well-suited for cryptocurrency mining. Stories abounded that year about large-scale mining operations, and the big profits that some of them were racking up.

But the party didn't last long. After peaking in December 2013, Bitcoin shed over 80% of its value over the following 13 months, and didn't really begin staging a recovery until late 2015. The GPU shortages, needless to say, soon disappeared. And with Bitcoin's architecture making mining less and less lucrative for small-scale participants over time, interest in the activity gradually diminished.

Today, to paraphrase an old saying, history isn't repeating, but it is rhyming. Bitcoin mining has made a bit of a comeback as the cryptocurrency's price soars to more than twice its 2013 peak and leads speculators to predict further massive gains are in store. But there's much greater mining interest in a rival currency known as Ether, whose price has risen by more than a factor of 40 since the start of 2017.

Ether's current total value of $33 billion is within striking distance of Bitcoin's $44 billion, and well above Bitcoin's value two months ago. And importantly, whereas Bitcoin mining is now largely done via expensive hardware rigs running specialized ASICs, Ether was designed to only be effectively mined via GPUs. That has opened the door for miners with limited computing budgets to join the fray.

Thanks to these miners, shortages have been reported in recent weeks for mid-range and high-end desktop GPUs based on AMD's power-efficient Polaris architecture. And on Tuesday, Pacific Crest upgraded Nvidia Corp. (NVDA) to Sector Weightafter talks with Asian graphics card makers pointed to "surging demand from cryptocurrency miners in China and Eastern Europe since early May."

Pac Crest now expects desktop graphics card shipments to be up 10% to 20% sequentially in Q2, after previously forecasting a 10% to 15% decline due to lower gaming-related demand during the seasonally weak quarter. Both AMD and Nvidia cards are said to be on allocation due to plummeting inventory levels.

Link:

Nvidia and AMD Are Benefiting From Bitcoin and Ether Miners, but for How Long? - TheStreet.com