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.
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.
131 Comments on Why the Litecoin Craze Hurts More Than Helps Brand AMD Radeon
From www.techspot.com/review/644-nvidia-geforce-titan/
MSRP for Titan was $1000.
MSRP for R9-290X was $549.
sound more like sour grapes to me than anything else mind.
Now a lot of people are criticizing the price of 290/290X ignoring the fact that even at these price levels the cards are better or equal value than the Nvidia cards.
This is a good reason to criticize the US retailers and give then some negative votes/feedback, not AMD.
Titan's price was just Nvidia trying to create new price categories for it's products. Continuing losing the low end market because of AMD's APUs and Intel's improved graphics from a joke to good enough, they tried to create new higher prices for the hi end market. $1000 for the absolute top, $700 for the second card. If Nvidia's ways tomorrow become the standard, then the prices would be something like that
880 $1000
870 $700
860 $500
and latter a dual card maybe for $1200.
Let's hope that AMD will not move that way in the future. 4K can give them a good excuse to pump up the prices for the hi end products in the near future.
Who's tongues does amd's name need to be on? The people who will use and recommend AMD or those who don't know the difference between a cpu, gpu, or gosh a confusing one the apu.
Dave, I know your a level headed guy but you comments like yours sound butt hurt. You wanted 290's but since they were unavailable you went with the next best option. Does that change that you wanted amd cards, and if you will or will not next upgrade?
What about the budget grabbers like me, who want one of those 290x's when they are used and cheap? There will be an incredible flood of amd gpu's flooding the market sometime in the next year as lower speced gpu's get out paced, and or gpu mining becomes obsolete. I await this with a gamers zeal.
What about all those who would of went nvidea but chose amd cards so they could mine and game such as myself. I was going to buy nvidea but got a 7970 because it would pay for itself, and it did with interest.
All these sold out cards = profit=RND=Better amd gpu's in the future.
More to the point, why would an AIB want to do this, even if they could? They're selling every high-end AMD card they can make. Why deliberately cut their profits?
People should post this thread as many places they can, making more websites aware of Litecoin's destructive monopoly on the reputation of the AMD Radeon brand. Hopefully someone (anyone) from AMD will see this somewhere in the interwebz and make some necessary adjustments in their product line-up or at the very least make a suggestion to their managers and higher-ups.
p.s. Maybe this is part of the reason why non-reference designs have been delayed for so long? I've been waiting for other alternatives other than Gigabyte's Windforce, but haven't seen one shred of evidence from the other bigtime players.
nVidia takes great pains to protect is CUDA HPC and GPGPU market to the point of not even engaging in any competitive bechmarking.
Well now the entire world knows just how bad nVidia GPU floating point performance really is. What AMD needs to do now is ramp up production and actively market to the Academic gpu crowd.
As Charles Darwin once observed "nothing succeeds like success". And prices are now starting to stabilise back to suggested retail.
AMD scored this holiday season. They ate nVidia's lunch with the R9 entry price point. The brilliance of that move is nVidia had so much already in the pipe at the old price that they either did not sell or they had to execute a rebate program, all the while loosing market share to AMD. Then the whole Litecoin mining storey broke nVidia's rice bowl. Expect to see a market share gain by AMD Radeon GPU's!
AMD has no control over who does what with their cards. Thinking they do is simply ignorant. They build a piece of hardware for the targeted applications, gaming, compute, and for competitive performance per dollar of cost Vs sale cost to the actual purchaser of their GPU core. Look at F@H since it was mentioned, when the first generation of GPU's that supported it was AMD it became a decision for many to make that their next purchase, Nvidia finally came up with hardware that could do it accurately enough and then it was their turn, how many 2-4XX series cards were put in machines just to run F@H and get a higher score? No one complained then that it drove up the cost of their gaming cards, even when the retailer and or Nvidia was gouging the customer.
We have two separate issues here.
First is the blind fanboi following that Nvidia has, and of course AMD wants. Disagree with this all you want, but people bought Titans and gave all sorts of reason why they did, even though logic says you were being screwed, most used them for "benchmark game" and epeen instead of actually gaming.
Second is the idea that somehow AMD and Nvidia are responsible for what their cards are end retailed at. The aren't. They sell a GPU chip to a partner company, who marks up the board and hardware, then sells it to Newegg, who marks it up again to whatver the market will bear. MSRP is what AMD or Nvidia say the card as a whole meeting their base engineering specs should be sold at for everyone to make a standard margin. ARP is what end board makers and retailers say the card is worth to the public, and the sale of cards at that price is the only justification needed.
Why is a guy in hydrabad India moaning about the inflated prices only seen in America, as Bta rightly points out in europe the litecoin markup is non existant as is the shortage.
Bta did an Rma go bad with Amd or something because some of your editorials lately have been ass shaped
hows about an editorial on nvidia or intel eh????
One can wish.
I like your idea about "mining cards", but here is the thing... nobody knows if this unstable 'currency' will even be around in a couple of years or if it will be worth mining at that time. AMD can't spare a penny on something like this...especially with its inherent stability issues.
Not AMD's fault, just a simple market result is all.
Thanks for the read. This was probably the best thing TPU put out in years regardless if I may disagree with the solution!
Screw you litecoin.
People that have no clue as to the inner workings of computers, are now aware of many things:
- there is something called *coin that people are 'mining' with computers to make money
- in order to 'mine' these coins you need something called a 'GPU'
- the *only* GPU that people are talking about are from a company/brand called AMD
So basically, in complete contrast to what the 'editorial' is saying, AMD has in the last few months, expanded their potential market to something exponentially larger than just 'Gamers', namely:' People out looking to make a quick buck in rough economical times'
That is a pretty lucrative market, and not only that, but that is a market that isn't going anywhere anytime soon. So, if you want to:
- Mine cryptocoins fast and dirty for an extra income
- Play videogames whether mantle optimized or at high resolutions
- Get into content creation
- etc etc etc...
You can buy an AMD GPU/s and do all of these things. Welcome to general purpose GPU computing.Article should really be titled 'Why I hope the litecoin craze hurts more than helps brand AMD Radeon'
I disagree also that AMD doesn't generate 'noise'. I mean, to be fair, that is all they are in marketing is hype. Look at the Rx XXX releases. The vast majority of that press conference had to do with TrueAudio. So, major hype with no content (still marketing regardless of the outcome). Perhaps a positive outcome of their marketing is what you meant?
AMD has ALWAYS pushed compute, really, they were the first to offer GPU F@H, before NVidia started sponsoring Stanford (who now has a building in s certain somebody's name, making it undeniable), it's just not looked at that AMD has because someone else has had a far larger voice in that market. So AMD knew exactly WHAT they were doing in those designs that sit on some shelves today.