Cryptocurrency Miners Bought $776M in GPUs in 2017, Mostly From AMD

New data on the GPU market has put formal numbers behind the visible impact of cryptocurrency mining on GPU prices. Unfortunately, we’ve also got fresh information suggesting the GPU price inflation cycle isn’t ending any time soon.

Jon Peddie Research has released data on GPU sales in Q4 2017 showing that GPU shipments decreased 1.5 percent in Q4, in-line with normal seasonal expectations. Year-to-year GPU shipments decreased by 4.8 percent, driven mostly by declines in laptop shipments (desktop dropped 2 percent, but notebooks fell 7 percent).

AMD’s market share rose by eight percent from Q3 to Q4 2017, suggesting an explanation for why Vega and Polaris chips are so over-priced (we noted this in our coverage earlier this week). If cryptocurrency miners are preferring Vega over Nvidia’s Pascal, it would explain why prices on AMD cards are blown sky-high — it reflects increased demand for those parts. JPR notes, “Over three million add-in boards (AIBs) were sold to cryptocurrency miners worth $776 million in 2017. AMD was the primary benefactor of those sales.”

We can make some very rough estimates about how many additional GPUs AMD might have sold by referring back to some previously published figures about AMD’s graphics sales. In November 2016, JPR also released a chart with quarterly graphics sales for AMD:

If we assume that AMD’s RX 500 and Vega launches pushed its quarterly GPU sales back to an average of 4.9 million units shipped per quarter, that would work out to ~19.6 million GPUs shipped per year. If we treat the cryptocurrency sales as an adjunct to gaming sales (as JPR suggests) it means those 3 million additional shipments are a feather in AMD’s cap. But they aren’t driving enormous profits to the company, given its contracted GPU prices weren’t calibrated to account for enormous price inflation.

There’s another reason we included this graph. Back in 2014, we speculated that the surge in AMD GPU prices could ultimately harm the company long term. As its share of the gaming market fell, it lost the opportunity to put brand-new Hawaii cards in the hands of gamers at a time when it was quite competitive (or even superior) to Nvidia on raw performance. And as the graph above shows, that’s exactly what happened. High prices on AMD GPUs drove sales down, and by the time the market prices were stabilizing, Maxwell cards were hitting the streets.

“Gaming has been and will continue to be the primary driver for GPU sales, augmented by the demand from cryptocurrency miners.,” said Dr. Jon Peddie, president of Jon Peddie research. “We expect demand to slacken from the miners as margins drop in response increasingly utilities costs and supply and demand forces that drive up AIB prices. Gamers can offset those costs by mining when not gaming, but prices will not drop in the near future.”

Discrete GPUs shipped in 36.88 percent of all PCs, down 2.67 percent from the previous quarter and JPR’s assertion on long-term price trends seems to confirm what Massdrop said earlier this week. Gamers hoping for a quick resolution to this issue would be best-served by looking elsewhere, whether that means taking a chance on a used GPU, investigating using an AMD APU, or optimizing games to squeeze the most performance possible out of your current card.