Companies Profiting from Digital Currencies Spike

Digital Currencies

OK, we all know that there is a cryptocurrency “gold rush” going on, BUT how can one get in on this without putting everything into ‘SpecCoin’? Well, just like in the old gold rush days of California, the ones that made out the best were the suppliers; Levis, camping equipment firms, etc. NOW? Here are some thoughts on those supplying the new digital miners. Not as “sexy” but could be great investments.
Bill Taylor/CEO

“Mining references generally evoke images of picks and shovels.

For advocates of bitcoin and the other cryptocurrencies surging in value, the gold may be in the shares of the companies that produce the computer processors and chips used to create the digital currencies in the process that’s become known as mining.

Digital coins can only be created by using computers to solve complex mathematical problems. The difficulty increases as more of the problems get solved, prompting the miners to require even more powerful hardware. With digital coin prices soaring, demand for the components is surging as miners are able to recoup their initial investment quicker.

A complete mining rig, which is made up of graphics cards, a processor, power supply, memory, cabling and a fan, costs between $2,400 to $3,800 on Amazon.com. The Antminer S9, which is estimated to mine 0.29 bitcoin per month, and retails for $2,795, which means you can break even in about four months with bitcoin at $2,700, without taking into account electricity costs. Miners typically buy complete rigs or build them themselves.

The following are some of the companies that make the parts.

The Santa Clara, California-based company manufactures graphic processing units used by gamers and increasingly, by digital-currency miners. GPUs listed in Nvidia’s website can cost as much as $1,200. The rig-mining market can grow to about $1.3 billion, and with GPUs making up approximately 2/3 of coin mining costs, the demand for GPUs can increase to $875 million, according to a RBC Capital Markets report on June 6. If Nvidia gets half of that, it represents a 10 percent increase on its GPU sales, RBC analyst Mitch Steves said in an interview. The company currently has about 75 percent of the GPU market, according to a Jon Peddie Research report…”

Source: Bloomberg