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Justin Jaynes
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I graduated with a BSEE from NCSU. Following technology companies and developments is a hobby of mine when I have free time. A few years ago I started investing, and have tremendously enjoyed it. I try and share a unique view from an engineering vice an investor standpoint, and enjoy learning... More
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  • AMD's GPUs Are Worth Their Weight In Litecoins

    Not really, referring to my article's title. From my understanding, litecoins don't weigh very much.

    To get this out of the way, I understand very little about bitcoins or litecoins, so I apologize in advance if I make any miners cringe with my wording in this article.

    The one thing that I do understand, as do many other investors and techies, is that the value of both virtual currencies has seen a sharp rise recently.

    A Quick History

    Both bitcoins and litecoins are peer-to-peer digital currencies. Speculators do something known as "mining" in which they do not start hacking away at a fiber cable with a pickaxe in hopes of striking it rich.

    Bitcoin.org defines the terms mining and hash as the following:

    Bitcoin mining is the process of making computer hardware do mathematical calculations for the Bitcoin network to confirm transactions and increase security. As a reward for their services, Bitcoin miners can collect transaction fees for the transactions they confirm, along with newly created bitcoins. Mining is a specialized and competitive market where the rewards are divided up according to how much calculation is done. Not all Bitcoin users do Bitcoin mining, and it is not an easy way to make money.

    The hash rate is the measuring unit of the processing power of the Bitcoin network. The Bitcoin network must make intensive mathematical operations for security purposes. When the network reached a hash rate of 10 Th/s, it meant it could make 10 trillion calculations per second.

    Devices that can perform many calculations in parallel are much better at mining than stronger serial processors. Think GPUs.

    Miners will setup somewhere in the spectrum from simple (single GPU to complex mining hardware (tons of GPUs or use of ASICs) in an attempt to increase the number of calculations that can be performed per second.

    As bitcoins have increased in value, technology companies have created specialized devices known as ASICs (application specific integrated circuit). These ASICs are far more powerful and efficient than simple GPU mining setups.

    A major difference between bitcoins and litecoins is the current value. Because bitcoins are very expensive, the market for bitcoins can support the use of these more expensive (specialized) ASICs. However, litecoins have recently started to increase in value, so as far as I know there are no/few ASICs available for mining litecoins, meaning mining via GPU is still a viable option.

    Nvidia Vs. AMD

    (click to enlarge)

    (click to enlarge)

    (click to enlarge)

    Joel Hruska of ExtremeTech (and various other sites) has an extensive write-up regarding performance of Adavnced Micro Devices (NASDAQ:AMD) vs Nvidia (NASDAQ:NVDA) regarding coin mining performance and efficiency. Read his article to understand how big this gap is. As one example, let me point out that the GTX Titan is a $1000 video card, whereas 7790's can be found on sale for ~$100-$120. When Joel originally wrote his article, the 7790 was a $150 card, meaning the value proposition is significantly higher now.

    In order for mining to be lucrative, the value of the coins mined must exceed the cost of gear plus electricity used to mine. AMD's cards seem to have an edge in overall performance and in power consumption vs calculations per second.

    Note: Due to the recent interest in litecoins, I have used benchmark data from bitcoins as it is more illustrative, but from what I have read on various forums and data sources (I, II), it appears that AMD GPUs are still more efficient at mining litecoins as well, allowing parallels to be drawn.

    Conclusion

    I am not suggesting this will be a meaningful source of revenue for an extended period of time going forward, nor should this article be construed in anyway as a recommendation for/against mining virtual currency.

    The importance of this I believe stems can be seen from comments made during the Q3 conference call:

    Hi, David. This is Lisa. Let me take the Graphics question. So, first, we've talked about Graphics as a multi-quarter growth strategy for us in terms of market share and we are certainly seeing that we are executing on that path.

    When we look at the third quarter relative to the fourth quarter and where we are going we have built a very strong product portfolio. We just announced our full lineup for the R7 and R9 Series and those were launched in September and shipping in October. So we did see a little bit of a transition at the end of the third quarter, but we do expect to gain share in the fourth quarter with our graphics business.

    AMD's Q3 GPU revenues declined significantly, and AMD stated the cause as being the transition to new GPU products. Wedbush estimated that console revenues accounted for ~$400M, meaning traditional GPU sales would have dropped to ~$270M, which is a pretty substantial sequential decline.

    However, this decline makes sense if the channel was being allowed to clear old inventory prior to the new GPUs shipping. Some tech sites harped on the fact that the majority of the R9 and R7 series graphics cards were nothing new as they used largely the same GPU chips as the 7000 series they were replacing, with the main exception being AMD's new Hawaii GPUs.

    Well, it seems as if the community is disagreeing with the tech sites. The R9 280X, which is a refresh of the 7970 GPU, is largely out of stock at newegg, as well as the 7970 GPUs. Notice the number of out of stock GPUs based on GCN architecture?

    The above screenshot is taken from CryptoCoinCharts in order to show how quickly the value of litecoins have exploded. Around November 15th or so is when the value seemed to begin the moonshot.

    The reason I say that this should not be depended on as a stable growth driver going forward is based on the volatility of cryptocurrency. If the value of litecoins implodes, so does the added value to AMD GPU cards. Or if Nvidia tweaks its GPU architecture, but that would not be an overnight change by any means.

    But for now, it seems that retailers are having little trouble moving AMD GPU inventory. I believe this will allow AMD to return closer to the historic $320M or so in GPU revenues during Q4.

    Disclosure: I am long AMD.

    Additional disclosure: I own both shares and options in AMD, and actively trade my position. I may add/liquidate or initiate a hedge at anytime.

    Tags: AMD
    Dec 06 1:04 PM | Link | 20 Comments
  • AMD, The R9 290 Release, And My Thoughts On The Pricing/Performance "Conundrum"

    Disclaimer: I have been taking a break from writing lately, but wanted to do a quick instablog on the R9 290 and 290X. If I write something up later in article form that covers the same material this post will likely be deleted.

    Feel free to look around at various reviews for the different cards and get your own feel for some of the opinions of the press.

    If I were to sum them up, I would say the comments are almost universally positive, with the exceptions being heat and noise; similar to the reviews we read regarding the R9 290X.

    One of the concerns I would like to explore just a little more in depth is the thought that AMD (NASDAQ:AMD) could be cannibalizing R9 290X sales.

    Depending on the time frame in question, then the R9 290 could absolutely cannibalize 290X sales. Think about this - essentially, according to Anandtech (one of the only negative reviews that I read - essentially Anandtech stated the card was too noisy for their tastes, and therefore they could not recommend it), AMD revamped the fan profiles in an attempt to take out Nvidia's (NASDAQ:NVDA) $500 answer to the R9 290x.

    The fear is that the R9 290 performance creeps into R9 290X territory - but the underlying reason appears to be merely a fan speed change; AMD was able to raise the fan speed to allow the card to run at higher clocks for longer periods of time, which in turn increased performance. So yes, in the near term the R9 290 represents a better value.

    This somewhat negative perspective on the R9 290X from PCPer in my mind inadvertently proves a positive point: as the R9 290X operates under a heavier load, the clock speeds throttle back in order to maintain the operating temperature. Coupling this with the change from the R9 290, we can see the performance potential of these cards if AMD is able to implement a more aggressive fan profile and raise performance that drastically.

    So if you take a short term view - i.e. the few weeks before after market designs appear, then yes I absolutely feel the R9 290 is the better value, and it can cannibalize R9 290X sales. But the longer term view is that I am looking at is the extra potential aftermarket coolers can unlock for the R9 290X.

    If AMD implemented a more aggressive fan profile and unlocked this performance, what is stopping them from doing the same with the 290X in order to compete with Nvidia's GTX 780 * (* meaning whatever they call it to compete with AMD)? Probably nothing.

    But this scenario becomes infinitely more interesting when we think about the add in board partners putting better coolers on the GPU.

    SUMMARY

    All in all, I view the fact that AMD was able to squeeze out enough performance from their 290 card to compete with a card that is $100 more expensive simply by adjusting the amount of cooling to the as a huge positive. Better/more aggressive cooling for the R9 290X should be able to (at least theoretically) unlock some extra performance from the R9 290x. Although more aggressive cooling won't do much for power consumption, it will do wonders for heat and noise. It should allow AMD to easily counter whatever Nvidia releases in the form of a better GTX 780. And it won't cost AMD anything to do it except a driver release that implements a more aggressive fan profile and a few decibels.

    But in my mind the real value of these cards is proved by demonstrating what better cooling can do in regards to performance. When MSI or some other company ships their version of Hawaii, those are the reviews I am most interested in, along with reviews regarding driver performance. Nvidia is known for having more reliable drivers, but this is something AMD is actively pursuing. To quote [H],

    So much talk about smoothness, frametime, and the actual experience of multi-GPU video cards while gaming has been discussed lately. In the past, AMD has been highly criticized of having a sub-par CrossFire experience, and rightly so. There were major issues with smoothness where games would stutter or feel choppy, even though the framerates looked good. We've been telling our readers for years that CrossFire just didn't feel as good as SLI while gaming.

    Those times have changed, at least on the new Radeon R9 290/X series. The new CrossFire technology has improved upon the CrossFire experience in a vastly positive way. Playing games on the Radeon R9 290X CrossFire configuration was a smooth experience. In fact, it was smoother than SLI in some games. It was also smoother on the 4K display at 3840x2160 gaming, and it was noticeably smoother in Eyefinity at 5760x1200.

    I wrote an article a few weeks ago pointing out the fact that the issues with AMD that the press were harping on affected only a quarter of one percent (that's right, a tiny amount). This above was one of the examples, but shows AMD is making great progress on this front.

    And while I'm waiting on reviews regarding driver improvements, I'll think of AMD having the headroom in their cards to unlock more performance as a good thing, as it gives them a very convenient way to answer Nvidia's GTX 780 Ti.

    Disclosure: I am long AMD.

    Additional disclosure: I am long AMD in both shares/options, and I actively trade my AMD position. I may add/liquidate shares/contracts at anytime. I am short NVDA via a very small number of puts that expire this month. I may liquidate my NVDA puts at anytime.

    Tags: AMD, NVDA
    Nov 05 1:13 AM | Link | 2 Comments
  • Verizon And Advanced Micro Devices Collaborate On Microserver Cloud Implementation

    Today, a collaboration was officially announced between Advanced Micro Devices (NASDAQ:AMD) and Verizon (NYSE:VZ) in a joint venture to increase Verizon's cloud services infrastructure.

    Gives Credence To Microservers

    Here is an article on ZDnet which briefly explains the differences between traditional and microservers. Microservers are the relative new comer in the network world.

    According to iSuppli, microserver forecast is expected to grow exponentially over the next few years, tripling from ~400k shipments in 2013 to ~1200k shipments in 2016. Although there are certain niche workloads that are better served by microservers, these nich workloads are growing quickly as the world becomes more connected through the use of smart devices.

    Implications

    Last week a video aired on CNBC stating that Verizon worked directly with AMD to build custom hardware in an effort to save cost. At that time, I only posted the video as a Stock Talk because I did not have enough information to write a full article.

    Image taken from CNBC Video Clip, posted on Yahoo! Finance:

    (click to enlarge)

    What became apparent today is that AMD worked with Verizon by giving Verizon access at lower levels to AMD's IP, allowing Verizon tailor software and hardware to AMD's hardware, providing a more stable, predictable, and secure cloud network.

    Implications cited included a potential impact to companies such as Hewlett-Packard (NYSE:HPQ) or Cisco (NASDAQ:CSCO). Companies such as HP typically sell hardware to these clients, so this announcement represents a shift in revenue away from traditional server vendors. Noteworthy is that the AMD/Verizon announcement came on the heels of a similar announcement AT&T, although the hardware powering AT&T's infrastructure has not been announced. The big shift here is that larger companies are leaning toward designing custom hardware in an effort to cut costs.

    The Question Is Will The SeaMicro Servers Use AMD or Intel Chips?

    SeaMicro's current microserver offerings currently feature a mix of both Intel (NASDAQ:INTC) and AMD chips. In an interview with VentureBeat, it was unclear as to which chips would power the Verizon servers.

    SeaMicro used Intel Atom chips before AMD acquired it, and it still offers several models with Atom chips. But the new SeaMicro SM15000 will use AMD Opteron chips, Feldman said. That's a blow to Intel, which has the leading market share in chips for micro servers. Intel has announced a number of its own new products in micro servers, but there is always a danger that low-end micro server chips could undermine Intel's high-end enterprise server chip business. So Feldman believes that Intel will be cautious about charging into micro servers.

    So based on this comment, I do not think it can be unequivocally stated that these servers will be Opteron powered, but it sounds highly likely. Given that AMD has also given Verizon lower level access to AMD IP in order for Verizon to design custom hardware, I think it is even more likely the servers will use Opteron.

    Conclusion

    For further reading, in addition to the VentureBeat article linked to above, I recommend an article on the Wall Street Journal as well.

    In the press release it was stated that the efforts between AMD and Verizon spanned 2 years. This demonstrates the length of time it takes between when custom projects begin between AMD and a partner. Given the uncertainty of AMD's custom-business model, further design wins should denounce some of the FUD surrounding the new business model. It demonstrates that the fruits of labor will not be immediately evident, but also that big announcements could come at any time.

    Given this microserver announcement and the console ban being lifted in China, an analyst from FBR has raised his price target on AMD.

    Best case scenario for AMD is that this deal is utilizing Opteron server chips, leading to higher margins and an overall larger impact on bottom line. But regardless of chips used, in the article on the WSJ, Seamicro does disclose that Verizon is its largest deal ever.

    Disclosure: I am long AMD, INTC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Additional disclosure: I am long both shares and options in AMD. I actively trade both my INTC and AMD positions, and may add or liquidate shares or options at any time.

    Tags: VZ, AMD, long-ideas
    Oct 07 9:33 AM | Link | 10 Comments
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