Bitmain May Have Made as Much as Nvidia Last Year

DooKey

DooKey

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According to Bernstein semiconductor team analysts, Bitmain, a manufacturer of cryptomining equipment, may have made as much as $4B in operating profit last year. Compare this to Nvidia and their $3B in operating profit last year. Bitmain has gone from a small time, unknown operation, to a powerhouse in the cryptcurrency market in just four years. Also, in addition to their manufacturing they also mine bitcoin and run mining pools. You have to hand it to the founders of Bitmain because they have truly gone from rags to riches on the back of the cryptocurrency market.

Today, Bitmain sells Antminer bitcoin mining rigs that can cost several hundred dollars to a few thousand dollars each. The company also operates "mining pools" in which participants collaborate on bitcoin mining in order to cut costs. As a result, Bernstein estimates Bitmain has 70 to 80 percent of market share in bitcoin miners and asics.
 
I just talked about this to my coworker. Whoever econ person they have at AMD and Nvidia (do they have one? ) that never taught them the laws of supply and demand... with price equilibrium should be fired/hired.

a. increase demand > increase price
b. increase supply < lower price over time... still rake profits

why did they pass on 20-60% profit margins to Newegg, Amazon, and other 3rd party retailers instead of adjusting their prices ? They could of then marketed crypto cards towards crypto companies and gaming cards towards gamers.

AMD loves operating at a loss over time. Why sell a chip for 189$ when you could sell it at a loss at 179$?
 
AMD and Nvidia make their money by selling large bulk lots of items to manufacturers and wholesalers at negotiated & agreed prices
They also don't have to deal with all the risks, headaches & loss that come from selling to the end users & they don't want to.
If they get greedy for all the profits themselves, they run the real risk that the bulk purchasers that write the big checks and guarantee their income streams for the quarters tell them "good luck with that, try selling them yourself and let us know how it goes".

Where AMD and Nvidia are coming out great right now is the fact that they Don't have to offer any discounts, rebates or bundles at this late stage in the product cycle & are still able to sell all their stock at full price which is pretty much unheard of.

Same kind of thing in the wholesale market.
Wholesalers were selling for example lots of 1080Ti cards to resellers for $750 and they were selling, they raised the price to $800 and were still selling lots.
Then the wholesalers got greedy to get all the profits & started asking for $1100 and $1050 for 50 and 100 packs & pretty much all the resellers said nope, have fun with the end users.
We'd then see those same lots of 50 and 100 cards at a time being offered for a week or two again and again with nobody buying till they eventually broke down and sold most of them at closer to previous prices.
 
The other big thing is that you can't suddenly increase supply. There's a time factor that has to be taken into account, and this introduces a ton of risk. If it takes 3 months to ramp up production, and cryptos suffer a crash, they'll have a load of inventory they'll have to write down.

It also depends on the contracts they have, since both nVidia and AMD don't produce things in house, it all comes down to TSMC or whatever fab they have contracts. Signing a higher production contract could backfire, for the same listed above.

This is why Samsung getting into crypto could be a good thing, for our videocard prices. Since Samsung has end to end supply and production, they're able to ramp up, and down production quickly to meet whatever profit target they're willing to take.
 
James21 said:
AMD and Nvidia make their money by selling large bulk lots of items to manufacturers and wholesalers at negotiated & agreed prices
They also don't have to deal with all the risks, headaches & loss that come from selling to the end users & they don't want to.
If they get greedy for all the profits themselves, they run the real risk that the bulk purchasers that write the big checks and guarantee their income streams for the quarters tell them "good luck with that, try selling them yourself and let us know how it goes".
Click to expand...

They also play the long game. They realize that this crypto craze isn't going to last. Even if crypto currencies do become the "money of the future" as the believers think it will (doubtful) it is not going to be some variant that requires vast amount of power to be squandered. They aren't going to go all in on this and try to extract as much money as they can, only to screw up their longer business.

Notice that nVidia spends a lot of time, money, and marketing on the automotive sector, both in car entertainment and self driving systems, despite the fact they don't make much of their overall profit on it. Why is that? Because they are dumb and failed econ? No, because they know that there's a limit to the gaming thing, and they want to make sure they are in upcoming markets. It may not be huge NOW but they think it will be in the future.
 
Jihan is going to be richer than Bezos some day.

Mark my words.
 
Jim Kim said:
But can they compete with my GTX 660 mining Vah-JJcoin.
Click to expand...

I'm not so sure about that Vah-JJcoin. Everyone seems to be getting in to easy, and it's getting spread pretty wide far to fast to hold spearhead efforts to remain tight and desirable.

PIIHBcoin, however, seems to be the defacto choice for hard hitters.
 
why isn't nvidia making GPUs and using it themselves to mine bitcoin? :whistle:o_O:pompous::pompous:
 
DF-1 said:
why isn't nvidia making GPUs and using it themselves to mine bitcoin? :whistle:o_O:pompous::pompous:
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Because it's not their business model, would introduce unnecessary risk, would make no sense, and they don't need to. Jen-Hsun didnt get Nvidia to where it is by being shortsighted. As a publicly traded company they're also beholden to shareholders. When they sell a GPU it's an "insta mine" and the profit is locked in.

But then Bitmain also doesn't get high off their own supply. Again, they don't need to. When they sell an ASIC miner for +/- 5% of what it would take 12 months of mining to break even, they've just insta-mined and locked in that profit. Bitmain's expertise isn't merely building slopped-together, technically mediocre ASIC computing hardware for big bucks, but having insane analytics ability for pinpoint market timing.
 
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oROEchimaru said:
I just talked about this to my coworker. Whoever econ person they have at AMD and Nvidia (do they have one? ) that never taught them the laws of supply and demand... with price equilibrium should be fired/hired.
.....why did they pass on 20-60% profit margins to Newegg, Amazon, and other 3rd party retailers instead of adjusting their prices ? They could of then marketed crypto cards towards crypto companies and gaming cards towards gamers.
Click to expand...
Because they know buttcoins don't really make any sense, mining is just a fad in response to the get rich quick bubble, and therefore demand can crash at any time so they're taking the safe route and not trying to produce a heap of cards and then get caught with excess inventory they can't sell at the price they wanted when the fad was at its peak.

Already happened to AMD once back when the R9 290 was still a fairly new card. They took a fairly big financial hit IIRC. Memory supply issues aren't helping either apparently. Various AIB's have already said even if they had the GPU dies they couldn't make the cards since the memory isn't there.

Also AMD already released a crypto specific card a while back too.
 
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