Cryptocurrency Mining Grew Faster Than Expected, Bernstein Says In Semiconductor Roundup

Technology investors always need to keep up with the latest market developments, and the cryptocurrency market is one of the most rapidly evolving fields. In a new report Thursday, Bernstein analyst Mark Li provides an update on cryptocurrency mining technology and the semiconductor stocks that are impacted.

The explosion in cryptocurrency mining has made mining tech obsolete and uneconomical much faster than previously expected, Li said. 

Ethereum’s transition to proof-of-stake will pressure application-specific integrated circuit sales more than GPU sales, the analyst said. 

“The migration of Ethereum to PoS is a risk to GPU and ASIC mining demand, but the risk to ASIC is much higher, as GPUs are flexible and can be used to mine other cryptocurrencies." 

Bitmain is the clear leader in the ASIC market for now, but there will soon be a “frenzy” of competitors, Li said. 

The Stock Impact 

A decline in cryptocurrency mining demand may not be as impactful to Advanced Micro Devices, Inc. AMD 1.46% and NVIDIA Corporation NVDA 1.14% as some investors fear, the analyst said. 

“Crypto risk remains something to watch for both NVDA and AMD (the latter possibly more than the former), but at the moment both companies appear to be managing it." 

Taiwan Semiconductor Mfg. Co. Ltd. (ADR) TSM 1.09% is the leading ASIC component supplier, but Samsung Electronics Co Ltd OTCSSNLF is gaining ASIC market share, Li said. 

Bernstein has the following ratings and targets for the stocks mentioned:

• AMD: Market-Perform rating, $13 target.
• Nvidia: Outperform rating, $275 target.
• Taiwan Semiconductor: Market-Perform rating, $42 target.
• Samsung: Outperform rating.