Selling cards down the mines
While Nvidia and AMD said they were putting gamers first, they don’t seem to have qualms about other industries buying up large stocks of cards. While certain retailer purchase limits might stall individuals gaming the system, that doesn’t stop companies who buy directly from the manufacturers or add-in-board partners.
Indeed, it may even be that AMD, Nvidia, and their partners have been giving preferential treatment to cryptocurrency mining hardware companies due to their volume purchases. During our chat with mining rig builder Easy Crypto Hunter earlier this year, Digital Trends was told the company had little difficulty buying large quantities of cards.
“Commercially we’re at a different scale,” explained founder, Josh Riddett, who told us that his company alone buys several hundred graphics cards a month. No wholesaler, retailer or manufacturer had shown any interest in limiting his number of purchases either. Although prices have gone up for him too, he said he frequently sees favorable rates for buying in bulk.
Edgar Bers, the head of business development and communications at cloud mining company HashFlare, told us his firm buys hundreds of AMD 400, 500 and Nvidia GTX 1060 cards a month. While it sources its cards from Estonian retailers, he did say that his company regularly secured discounts for the bulk purchases, and never had any problems with supply – even if the prices had gone up in recent months.
Despite this, AMD and Nvidia claim that cryptocurrency miners have made little difference to their bottom line. AMD released a statement reiterating numbers released during its Q4 2017 earnings call, that “annual revenue related to Blockchain was approximately mid-single digit percent in 2017.” Nvidia CEO Jensen Huang said in a recent chat with TechCrunch that cryptocurrency mining attributed to a small percentage of Nvidia’s overall business.
Gamers come third
Another pressure on Nvidia’s graphics card business is machine learning. If you watched CEO Jensen Huang’s keynote at the GDC earlier this year, you’d be forgiven for thinking that Nvidia was an AI hardware developer. Its recent financial report made it sound like one, too. The first graphics card it debuted for its new Volta generation was the Titan V, a multi-thousand dollar card that was designed to facilitate machine learning and AI development, far more than it is to push additional pixels through to your new 4K display. AMD is also working on AI hardware, with an ongoing partnership with Tesla to power the AI in its self-driving cars and the hint of a new, AI-focused Vega card on the horizon.
Gamers and hardware enthusiasts are no longer the only market for graphics cards.
With this pivot by both companies towards AI development, gamers are once again sharing the global stock of graphics cards with a burgeoning industry. A seeming confession from Russian bank, Sberbank, appeared online in late 2017, which claimed that it had been buying up masses of GPUs for AI research. It claimed that that was the main reason for shortages in Russia, and associated price hikes.
That kind of purchasing may be replicated in western markets. Forbes released a report in September 2017 which suggested a sizeable portion of Nvidia’s “gaming” sales were down to machine-learning and data-center companies buying gaming graphics cards for their own AI development purposes.
It suggested that gaming graphics cards were far cheaper, and often performed better, than existing server-grade chips. The report cited AI start-up Clarifai as a major proponent of using Titan graphics cards, often overclocked to achieve higher levels of performance, for its goals. Clarifai’s CEO, Matt Zeiler, even suggested that Nvidia has entirely new targets in mind when it comes to its hardware in the near future. “If you look back a few years ago, Nvidia was just a gaming company,” Zeiler told Forbes. “They’ve completely shifted to machine learning.”
That’s certainly been the case over the last year. The combination of AI and cryptocurrency purchases providing a rapidly increasing demand, and rabid retailers (both first and third-party) only too happy to capitalize on the trend, drove prices to unprecedented levels. While prices have subsided some in recent months, these trends give reason to fear they won’t return to normalcy soon.
If even large retailers dedicated to these audiences have struggled to get the stock they need, it seems likely that problems will continue for gamers in the future – especially as automotive adoption of AI looks set to explode in the next few years.
While supply may one day catch up with demand, and pricing may return to some semblance of normality, gamers will need to wait for that day to come. Even if it does happen, one thing’s for certain — gamers are no longer the only child of graphics card companies. They are going to have to learn to share.