Ethereum is being blamed? Morgan Stanley believes GPU sales for cryptocurrency mining will fall by 50% in 2018

Joseph Moore, an analyst at Morgan Stanley, has predicted that sales of graphics cards (GPUs) used for cryptocurrency mining will plummet in 2018, a potential hurdle for manufacturers like AMD and Nvidia.

According to news outlets Barron’s and Benzinga, Moore said in a new report published this week that various blockchain network upgrades — including the Ethereum network upgrade that reduces mining block rewards from 5 ETH per block to 3 ETH — will have a real impact on miners, as these block rewards are the main economic incentive for miners to participate in mining.

As a result, companies like AMD could see sales of graphics cards related to cryptocurrency mining fall by as much as 50% next year, according to Morgan Stanley.

Moore wrote:

“We think that graphics card sales from Ethereum mining will be $800 million in 2017 and will decline by 50% in 2018, which can be verified by looking at the increased complexity of this mining algorithm. Unless Ethereum prices explode, the downside variance of our 2018 forecast is more likely than the upside variance.

The Morgan Stanley analyst, who wrote about AMD’s potential graphics card sales issues two weeks ago, downgraded the company’s stock rating from “wait and see” to “underweight,” arguing that while AMD has made some extra profits from the cryptocurrency community, those revenues won’t last.

In his analysis, he wrote, “We expect cryptocurrency mining to taper off from here,” and he predicted that demand for gaming graphics cards will similarly decline in 2018.

As previously reported by Coindesk, AMD’s revenue grew 19% as its latest graphics cards became popular, while rival Nvidia also saw a sharp rise in revenue as some GPU buyers used their graphics cards for cryptocurrency mining.