Wednesday, January 1st 2014

Why the Litecoin Craze Hurts More Than Helps Brand AMD Radeon

Price wars between GPU makers are something to look forward to each year, as that's typically when you get the best bang for your buck. Such an optimal time to buy new graphics cards usually comes when both AMD and NVIDIA have launched a new graphics card lineup, each. AMD tends to launch its lineup first, followed by NVIDIA, which then begins a cycle of proactive and reactive price-cuts between the two, which churns up the $300 price-performance sweet-spot so well, that a purchase from that segment usually sets your PC up for the following three years. 2013-14 saw a major disruption to this cycle, Litecoin mining. Litecoin miners will hurt more than help brand AMD Radeon, here's why.
Litecoin miners are buying up AMD Radeon GPUs. The reason being, that GPUs based on the Graphics CoreNext architecture are exceptionally good at processing P2P currency hash workloads, the only way just about anyone with a computer can create real money by putting their CPU or GPU to work. CPUs simply won't cut it with such processing loads anymore, despite being multi-core and equipped with AES-NI instruction sets.

GPUs can inherently handle parallelized workloads better, and it just so happens that investing in AMD Radeon GPUs is profitable for Litecoin miners, because they pay for themselves, and go on to generate revenue, when deployed in a good enough scale. Graphics CoreNext is the only GPU architecture that restores competitiveness of GPUs against ASICs, chips purpose-built to handle peer-to-peer currency validation hash processing.

Litecoin, like Bitcoin, is a peer-to-peer currency. It's decentralized, in that there's no central bank or monetary authority. The U.S. Federal Reserve governs the U.S. Dollar, for example. A triad of HSBC, Standard Chartered, and Bank of China issues the Hong Kong Dollar; Euro by the European Central Bank, and most countries have constitutional bodies set up to handle their currencies. Every transaction using a currency, including buying soda from a vending machine using loose change, is vouched for by its central bank. Litecoin doesn't have that, and so it relies on a distributed computing network to validate each transaction, and the integrity of each unit of the currency, with the wallet it's part of.

Unlike older distributed computing ventures like Folding@Home and WCG, which continue to draw people to donate some of their CPU/GPU time for charitable causes like processing scientific problems; the Bitcoin and Litecoin networks pay people who participate in their computing networks. They're paid in, well, Bitcoins and Litecoins, respectively. The beauty of it all? Not only can you pay for some goods and services with these currencies, but also exchange them for your everyday currency. They convert to U.S. Dollar, and you probably can convert a U.S. Dollar to any other currency on the planet.

The faster you process P2P currency validation loads, the more load is directed toward you, and the more you earn. Performance per Dollar immediately becomes the king here. Litecoin.info compiled an exhaustive list of AMD and NVIDIA GPUs, sorted by their Litecoin Hash processing performance. You'll note how at reference clock-speeds, NVIDIA's GeForce GTX Titan crunches just 320 kH/s (kilo-hash per second), while a Radeon R9 290X, at reference base-clock speeds, yields over three times that, at 980 kH/s. The GeForce GTX 780 Ti in the comparison yields 430 kH/s, but its clock speeds are not mentioned, and so you can't take its numbers at face-value. Even for a moment if we assume that the $650 GTX 780 Ti is running at reference speeds, you can still work out a huge price-performance gap between it and the $550 R9 290X. This, we believe, has led to some North American retailers getting opportunistic, who inflated the retail price of the R9 290X to prices close to $700, and the R9 290 (non-X), close to $500, from the $399 MSRP it launched with.

These hikes in prices of AMD Radeon R9 series products needn't be in reaction to a hike in demand, and retailers have the luxury of assuming that anyone who is buying a Graphics CoreNext-based GPU is doing so for Litecoin/Bitcoin. And so we find the argument that Litecoin mining has caused a shortage in AMD Radeon inventories, which is responsible for the price hike, absolute horse poo. More so, because AMD's chips not just destroy NVIDIA's, but also go up against some purpose-built ASIC boards, on the cost-performance metric.

Yet another reason we believe that the hike in AMD Radeon prices is not a result of inventory shortage, is because of pricing in other markets. Retailers in the EU apparently have healthy inventories of AMD Radeon, or at least the unaffected prices of graphics cards there seem to suggest that, if we were to believe the short-supply argument. We don't think Europeans aren't enamored by P2P currency, or the art of making money, but that European retailers aren't getting cocky about pricing their AMD Radeon inventory to end users, at least not yet. Eventually, bad pricing of AMD Radeon may catch up in Europe.

That brings us to the operational portion of this OP-ED. How the P2P currency craze hurts AMD more than helps it. AMD isn't manufacturing "Hawaii" silicon on a war footing. There are no indications that the company is scaling up supply to the "demand." The inflation in AMD Radeon prices appears to be backed more by the chips' huge price-performance advantage over NVIDIA at P2P currency processing, rather than short-supply. Whoever is into Litecoin processing, is apparently willing to cough up $700 for an R9 290X.

What this does, is it makes AMD Radeon prohibitively expensive for the target market of AMD Radeon, gamers and PC enthusiasts. Price-performance gaps between AMD and NVIDIA are tight and mangled; when it comes to the stuff Radeon and GeForce are actually designed for, to render 3D graphics for games. Fewer gamers and enthusiasts will buy AMD Radeon from here on out, as a result of the Litecoin craze. In the worst case scenario, this could give NVIDIA the opportunity to arbitrarily raise prices of GeForce GTX products slightly, while still maintaining higher price-performance at gaming, if not P2P currency processing.

Here's what AMD could try, to wriggle itself out of this mess - fight fire with fire, and build low-cost, limited edition AMD Stream GPGPU boards based on the Graphics CoreNext architecture, which offer higher price-performance ratios (at P2P currency processing) than even its own Radeon R9 series graphics cards. Those AMD Stream boards could be based on chips that are purpose-built for P2P currency processing loads, don't come with too much memory, and lack unnecessary components, so they could be sold at relatively low prices, and beat Radeon R9 series at price-performance. Again, there are two price-performance ratios at play here, one at P2P currency processing, and one at gaming, and the former is holding the latter hostage, in the current scenario. If AMD succeeds in making Radeon R9 series unappealing to the P2P currency community, it will restore the brand to its original target audience, the gamers.

AMD spent the better part of the past five years in building some impressive game developer relations, who developed and optimized their games for AMD Radeon. The company risks harming those efforts, if it gives in to the Litecoin craze. It may cut some profit by catering to the craze with Radeon R9 in the short term, but those profits will inevitably be at the expense of brand-Radeon in the long term. Time for some hard thinking.
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131 Comments on Why the Litecoin Craze Hurts More Than Helps Brand AMD Radeon

#101
bpgt64
captianpicard
As a gamer/hobbyist miner, IMO there is no reason to buy nvidia at this point. Why buy a nvidia card when I can run my radeons when I'm not gaming and essentially have my cards pay for themselves after only 1 or 2 months? I enjoyed nvidia products for very many years but I am not going to turn down what is essentially a top tier, free, crossfire setup. The litecoin difficulty rose as more and more AMD cards were added to the network but seems to have stabilized as the supply of cards dried up. Litecoin mining is still profitable assuming you pay a reasonably low rate for electricity. Besides, the money nowadays is not really in bitcoin or even litecoin anymore, but other scrypt based alt coins such as dogecoin/gridcoin where the profits are potentially enormous for the early miners.

I have been an avid nvidia follower for most of my gaming career but things have shifted with the litecoin craze. An HD 7950 that sold for <$200 last year now sells for 1.5x that, used. So a gamer who bought a 7950 or 7970 in the past year actually saw the value of their card RISE over time, something that I never could have imagined. In terms of performance, all of my AMD cards overclock extremely well, far better than anything I've been able to do with my nvidia cards. They also perform well for all the games I've tried and the drivers are not nearly as bad as people make them out to be.
This is certainly a valid perspective, but coming from someone who wants to drop Nvidia, and go to AMD, there's almost no reason to do so with the prices inflated the way they are. If AMD ramps up production and we start seeing R9 290s at 400 with after market coolers, AMD will win alot of friends I think because they have the performance/price ration on lock. The fact there going for 550-600 right now makes Nvidia somewhat attractive.
Posted on Reply
#102
Vario
AMD always drops prices fast.
Posted on Reply
#103
Relayer
Vario
Theres plenty of times things barely work. Heres an example: the card is overclocked and tweaked to run bitcoin with maximum hash. Then the user bios flashes it back and sells it on ebay. It is now unstable even at stock settings and I have to underclock it to get it to work.

When I was younger I owned a lot of things that degraded really bad from heat. I had a Pentium4 inside of a 2004 Shuttle barebones mini pc that ran really hot (100*C) all the time because the heatpipes in the shuttle case would shift the thermal paste when the case was moved. This Pentium 4 never worked right after that on later full sized mobos. Heat ruins electronics. Remember the XBox RROD? Mining generates a lot of heat when you put 4 cards next to each other.



Here is a typical mining setup:


Now I know why my PCB sags so bad.

Heres an inhouse example:

http://www.techpowerup.com/forums/threads/sexy-hardware-close-up-pic-clubhouse.71955/page-306#post-3043802
I've never seen that output configuration. What cards are those? They look old as dirt, with paint scraped off the sides, etc. I find it hard to believe this is typical at all.

Edit: Your in house link says it's a guess as to what happened to the chip. Do you actually know how the chip broke like that?

Edit 2: Looked up the image and those are 4x5970's. Well used for sure, judging by the condition in the photo.
Posted on Reply
#104
Nordic
Vario
Here is a typical mining setup:

I am more used to seeing stuff like this.
I have seen those ghetto setups like that. They exist. They get attention because, well look at it. You and I both have no way of knowing if that is typical. I doubt it is common myself but I only have my word for that.

Vario
Yeah theres a lot of people who don't have brains in it, thats why its such a bubble. I don't know how anyone could ever statistically model a futures price for bitcoin because its purely based on past price increases rather than anything else. Thats a bubble. "yeah man its gonna go up because its been going up, time to buy in!" It has a really high cost of carry (electricity bill) and it has inherent value only in that it allows pedo's and druggies to buy illegal stuff.
Here is a good article on bitcoin being a bubble. Link.

Bitcoin is starting to move away from the silk road(drugs) being its primary use. Without the silk road and other more black market type uses bitcoin would not of gained any traction what so ever. Honestly, I myself do not mind the criminal uses. The porn industry, although not criminal, still has negative connotations the same as drugs has had determined the use of VHS and DVD's. "One oft-recalled explanation for the failure of Sony's Betamax videocassette format in the 1980s was the Japanese company's ambivalence towards producers of pornographic videos. By contrast, proponents of VHS, Betamax's rival, welcomed adult content with open arms and, the legend goes, caused Betamax's demise." (Link)
Posted on Reply
#105
Relayer
james888
I am more used to seeing stuff like this.
I have seen those ghetto setups like that. They exist. They get attention because, well look at it. You and I both have no way of knowing if that is typical. I doubt it is common myself but I only have my word for that.



Here is a good article on bitcoin being a bubble. Link.

Bitcoin is starting to move away from the silk road(drugs) being its primary use. Without the silk road and other more black market type uses bitcoin would not of gained any traction what so ever. Honestly, I myself do not mind the criminal uses. The porn industry, although not criminal, still has negative connotations the same as drugs has had determined the use of VHS and DVD's. "One oft-recalled explanation for the failure of Sony's Betamax videocassette format in the 1980s was the Japanese company's ambivalence towards producers of pornographic videos. By contrast, proponents of VHS, Betamax's rival, welcomed adult content with open arms and, the legend goes, caused Betamax's demise." (Link)
Sure, there are mining rigs out there that some are nicely done and some are as the pic I responded to. Thing is you can google mining rig pics and that original picture is about the worst example there is (I'm sure someone will now find a worse one ;)). I mean really, look at the physical condition of those cards! The post was made to make it seem like the market was going to be flooded with examples like that. Not as a worst case example.



I'm sure we've all seen pics like this too. What's it prove?
Posted on Reply
#106
damric
See if I leave you any coins in my will.
Posted on Reply
#107
GLD
I can care less about cyber coin mining. I really think it is a bunch of BS. It pisses me off that it is driving up AMD gpu prices. I want that crap to stop and the prices get back to msrp. ARGH!
Posted on Reply
#109
The Von Matrices
suraswami
Price of both AMD and NV GPUs are ridiculous, its funny how both companies rebrand and hike the price. Does AMD even get a higher cut from these retailers?

http://promotions.newegg.com/combo/14-0151/index.html?icid=231190
There is no conspiracy by AMD, NVidia, or the board vendors. The retailers are the only ones increasing prices and earning the increased profit. Newegg is the most egregious at this, as you can see.
Posted on Reply
#110
Nordic
If any of you were newegg, and the opportunity to rise prices was there, would you?
Posted on Reply
#111
happita
The Von Matrices
There is no conspiracy by AMD, NVidia, or the board vendors. The retailers are the only ones increasing prices and earning the increased profit. Newegg is the most egregious at this, as you can see.
Not like it matters to Newegg, but it sucks that I will be taking my business elsewhere when I find the opportunity at a different retailer to get a video card substantially cheaper than what they are selling them at currently.

james888
If any of you were newegg, and the opportunity to rise prices was there, would you?
The thing is that we don't know whether or not AMD are producing enough cards to meet the demand, so in essence, Newegg is almost "forced" to increase prices to deter some of the demand from buying up the low amount of stock in their inventory. Whatever the case is, it certainly sucks for consumers who can't afford these extravagent prices. I've been waiting since November for non-reference designs and in that time-frame, the prices got so fudged out of wack, I can't justify spending $500+ for a video card now. But at the same time I'm banging my head for not getting one at launch and a third-party aftermarket cooler. Oh well :(
Posted on Reply
#112
cunkymonkey
Octopuss
I don't really care what it does to AMD, but I've had my fucking Asus 280x ordered since 6th December and today got an email from the store saying the cards are not available and they have no idea when will they show up. There are NO other goddamn alternatives at all.
Screw you litecoin.
Sorry Octopuss, that was because of me! I have 20 of them running. I haven't played a video game since GTA was released in 2001. So I guess all these cards can play some cool games? What people who aren't business types don't get is that the Alt coin revolution is like penny stocks. We've got traders, miners and long term investors. So long as people are making money the "system" will be kept operational by those making money. The miners are just one part of this whole thing. Is this a fad that will be over by next years GPU release? It doesn't look like it. Why when it has cult like support by libertarians who think hyper inflation is coming, it does offer simply value transfer worldwide and offers a trading platform without regulation. Just saying if you think this litecoin thing will all blow over don't hold your breath.

I could be wrong but when people are making money... the ball usually stays in play.
Posted on Reply
#113
DRDNA
True:rolleyes:
I don't like the current prices or offerings so I still haven't upgraded. When things look right I will. It seems if you want a fair price that you have to get the card at initial release or it goes up and up. This use to be just the opposite.
Posted on Reply
#114
Nordic
cunkymonkey
Sorry Octopuss, that was because of me! I have 20 of them running. I haven't played a video game since GTA was released in 2001. So I guess all these cards can play some cool games? What people who aren't business types don't get is that the Alt coin revolution is like penny stocks. We've got traders, miners and long term investors. So long as people are making money the "system" will be kept operational by those making money. The miners are just one part of this whole thing. Is this a fad that will be over by next years GPU release? It doesn't look like it. Why when it has cult like support by libertarians who think hyper inflation is coming, it does offer simply value transfer worldwide and offers a trading platform without regulation. Just saying if you think this litecoin thing will all blow over don't hold your breath.

I could be wrong but when people are making money... the ball usually stays in play.
I agree. Alt coins and other crypto currencies aren't going away any time soon.
Posted on Reply
#115
R-T-B






A true mining setup. 6+ MHash

I know all you AMD card lovers want to save these beauties from this graphics card hell. You can't, they're mine. And they'll be slaving away making me money until they melt...
Posted on Reply
#116
Octopuss
What in the shit is this mess. I call that hardware rape.
Posted on Reply
#117
R-T-B
Believe it or not, those cards run cooler than most gaming rigs.

I'm still pretty sure it's a tentacle rape scene though... Somehow I get twisted pleasure out of how bad it looks.
Posted on Reply
#119
AsRock
TPU addict
james888
I am more used to seeing stuff like this.
I have seen those ghetto setups like that. They exist. They get attention because, well look at it. You and I both have no way of knowing if that is typical. I doubt it is common myself but I only have my word for that.



Here is a good article on bitcoin being a bubble. Link.

Bitcoin is starting to move away from the silk road(drugs) being its primary use. Without the silk road and other more black market type uses bitcoin would not of gained any traction what so ever. Honestly, I myself do not mind the criminal uses. The porn industry, although not criminal, still has negative connotations the same as drugs has had determined the use of VHS and DVD's. "One oft-recalled explanation for the failure of Sony's Betamax videocassette format in the 1980s was the Japanese company's ambivalence towards producers of pornographic videos. By contrast, proponents of VHS, Betamax's rival, welcomed adult content with open arms and, the legend goes, caused Betamax's demise." (Link)
Betamax failed due to the heads in them as they were a lot more expensive and higher quality than VHS.

Anyways, if people are making a lot on it it will become common but i hope it dies soon ha.. Getting sick of seeing the card i want priced 200$ more than it should be..
Posted on Reply
#120
vega22
i think most people who are a little more serious about their mining use stuff like these.

Posted on Reply
#121
R-T-B
Meh, I'm serious. Just lazy. If I upscale I'll need to tweak my rig.

In other news, my file server has apparently went down and my pic links are broken. Remote desktop isn't working either. Maybe my miners just burst into flames and took the house with it... We'll find out tomorrow.
Posted on Reply
#122
AsRock
TPU addict
marsey99
i think most people who are a little more serious about their mining use stuff like these.


It be awesome if some one made a case like that.. Although i don't know about the extensions coursing any issue's playing games.
Posted on Reply
#123
R-T-B
Just updating to say my rig did not melt, my servers
AsRock
It be awesome if some one made a case like that.. Although i don't know about the extensions coursing any issue's playing games.
If you use 16->16 Risers that transmit the PCIe voltage, you are fine. Otherwise you risk overspecing your GPU, and being bound by a crappy 1->16 lane riser, which gives you uh... one lane of gaming performance. Fine for mining, for gaming? Not so much.
Posted on Reply
#124
vega22
AsRock
It be awesome if some one made a case like that.. Although i don't know about the extensions coursing any issue's playing games.
aria sell them.
Posted on Reply
#125
AsRock
TPU addict
marsey99
aria sell them.
Problem is i don't have the cutting tools to actually make one in a case :(..
Posted on Reply
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