AMD shrugged off one of Wall Street's biggest concerns about cryptocurrency mining
- AMD told analysts on its first quarter earnings call that it's not worried about second-hand graphics chips flooding the market as the interest in crypto dies down.
- Cryptocurrency mining made up 10% of the company's first quarter revenue, the CFO said.
- Shares surged more than 9% following its expectations-topping earnings results.
- Follow AMD's stock price in real-time here.
AMD (Advanced Micro Devices) got a big boost as its graphics chips, once popular only among gamers, were being gobbled up by would-be cryptocurrency miners at the height of this winter's crypto craze.
But as crypto prices have declined in 2018, so too has demand for GPU's for mining, worrying some Wall Street analysts that used cards might flood the secondary market and hurt AMD's sales of new chips.
The company's CEO, however, says this isn't a worry.
"We don't see a significant risk of secondhand GPUs coming into the market," chief executive Lisa Su said on a conference call following AMD's expectation-topping first quarter earnings on Wednesday.
"We do see a bit of volatility and that's why we are putting into our forecast for the second quarter and the second half a little bit lower blockchain demand, but that's more than made up for by the other new products and the way the new products are ramping in the business."
The price of bitcoin hit a peak of $19,843 in January, and resulting interest in mining with AMD chips contributed to 10% of first quarter revenue for the company, CFO Devinder Kumar said on the call.
Even without help from crypto, the company doesn't seem to be worried about a dropoff anytime soon. AMD also raised its revenue forecast for the second quarter to $1.725 billion, a 50% increase over the same quarter in 2017, in the release.
But the road ahead will be difficult as prices continue to slide: Bitcoin is now down 55% from its peak, new "application-specific" mining computers are being introduced to the market, and ethereum - the second-largest cryptocurrency by market cap - could switch to a less intensive mining process within six months.
"A crash in cryptocurrency mining, and a sudden sale of grey market graphics cards could lower average selling prices and volumes of new graphics cards for several quarters," UBS warned clients earlier this month.
Shares of AMD climbed more than 9% following its earnings report Wednesday and are down 2.8% for the year so far.
