A Wall Street bank is betting Nvidia will win the cryptocurrency battle (NVDA, AMD)

June 30, 2017

A Wall Street bank is betting Nvidia will win the cryptocurrency battle (NVDA, AMD)

genesis ether enigma mining ethereum

Nvidia and AMD are in a war.

The two companies both produce graphics cards and compete over PC gamers, self-driving car manufacturers and data center managers to prove that their technology is superior. Nvidia tends to be ahead in many of those markets and has seen its stock rise more this year because of it.

A new market is emerging though. The two graphics processing unit (GPU) companies are currently fighting over the cryptocurrency GPU market, and both are rumored to be releasing cryptocurrency optimized chips in the near future, according to RBC Capital Markets.

Cryptocurrencies are red-hot right now. Bitcoin is probably the most notable and has been around for years. But, recent explosive growth in rival currency Ethereum, has been making headlines. Recently, $100 million worth of GPUs were added to the Ethereum network in just 11 days.

The cryptocurrencies are made up of a decentralized network of users, and every time a transaction occurs in one of these currencies, it has to be verified by the whole network. People who help confirm these transactions are called "miners" and often use GPUs to speed up the calculations required to verify payments.

Previously, miners have used GPUs designed for gaming in their computers. This works, but isn't optimized for the task. Nvidia and AMD could release new cards that are optimized to draw as little power as possible and increase the speed of cryptocurrency specific tasks.

RBC reckons that when this happens, Nvidia's chip will outpace its rival AMD.

"Given Nvidia's performance lead across numerous categories (gaming and data center) we think the Company is best positioned to become the market leader in GPU based cryptocurrency mining if a new product is released," RBC wrote in a recent note to clients.

Details about the new cards are sparse, and their existence is only rumored for now. Considering only current GPUs, AMD has beaten out Nvidia because it has been faster at mining-specific tasks. RBC is betting this will change soon. When Nvidia has time to optimize their technology for mining, RBC thinks the company will be able to outpace AMD.

Previous domination in markets Nvidia has set its sights on is really the only information RBC is working with. Until the new cards come out or are officially announced, improvements are only hypothetical. RBC thinks Nvidia's work in data centers and high-end consumer gaming is enough to bet on the company winning the cryptocurrency market as well. Nvidia is certainly making waves in the self-driving car market, with a recent slate of high-profile partnerships.

Only time will tell. Nvidia is up 43.4% this year, compared to AMD's 10.24% increase and the general S&P 500's 7.17% increase.