The three stocks to watch for a cryptocurrency earnings boost this quarter

Digging deep.
Digging deep.
Image: Aurelien Foucault for Quartz
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Three companies are looking to sell shovels during a crypto-mining gold rush: chip-maker TSMC and the graphics card manufacturers Nvidia and AMD. Collectively, they produce the silicon and circuitry that power the vast data-centers mining bitcoin, ethereum, and other cryptocurrencies.

TSMC, the world’s largest independent chip maker, said last week (Oct. 19) that its third-quarter earnings were boosted by gear popular among crypto-miners. “We saw continued strength from automotive, [internet of things] and high-performance computing, which includes a surge demand from cryptocurrency mining,” TSMC co-CEO Mark Liu said in a conference call (pdf).

Bitmain, likely the largest maker of crypto-mining rigs, contracts with TSMC to produce customized silicon. It’s unclear which other mining rig manufacturers have the scale to contract with TSMC, but Liu said crypto-miners accounted for between $350 and $400 million in revenue last quarter, or up to around 5% of the company’s overall sales. “So it’s pretty big and it’s a pick up from the third quarter and stay on for the fourth quarter,” Liu said on the call. TSMC’s US-listed shares are up around 40% so far this year.

Two more firms will soon report earnings that could show a similar crypto-mining boost. AMD, the graphics card maker, said it saw “elevated demand” from crypto-miners in the second quarter. When it reports its latest earnings tomorrow, analysts will be watching to see if that demand has been sustained.

Nvidia, which dominates the graphics card market, will report third-quarter earnings next month. Its CEO, Jen-Hsun Huang, said last quarter that “blockchain and cryptocurrencies are here to stay,” after seeing a revenue boost from crypto-miner gear.

While none of these companies rely on the crypto business for the bulk of their sales, they are generally bullish on the sector. TSMC’s Liu noted that despite regulatory crackdowns, mining-rig makers seem to be doing a brisk business. “[Blockchain] technology will transform many of the contracts or payment methodologies today,” he said.