This site may earn affiliate commissions from the links on this page. Terms of use

Cryptocurrency-fueled demand has driven the price of AMD Radeon cards through the roof in recent weeks, and consumers are feeling the pinch. This is a trend we’ve remarked on several times in the past, but rocketing prices have hit new heights in recent days, with the price of the R9 290X briefly breaking $900 over the weekend. Considering the card carries an official $550 MSRP, that’s a massive 64% over premium.

Prices seem to have come down slightly since yesterday’s exuberance; the R9 290X is currently selling for a “mere” $800 at Amazon, while Newegg has a handful of cards in stock for $700. The R9 290 is selling for $600 — a mere 1.5x markup on its $400 MSRP. (Oops: When I started writing this story, Newegg had a handful of cards in stock for $700. Now, it doesn’t.)

The insanity, however, isn’t confined to the highest-end cards. Here’s a comparison of the official AMD MSRPs and the current selling prices.

Even the R9 270 cards are selling for 30-40% over MSRP, while the R9 280X — a GPU that’s supposed to cost $300 — is actually selling for $489. We can zoom in on one particular card thanks to website price-tracker CamelEgg, and see the greater problem.

Save for a brief period in late November and immediately after Christmas, the gap between official selling price and street price on the R9 290 has been enormous. It also corresponds exactly with the rise of alternative cryptocurrency mining (Litecoin, Dogecoin, et al.) as Bitcoin became too difficult to work with.

This might sound like a great deal for AMD. Huge demand for video cards lifts prices, prices drive profits. Everybody wins, right?

Maybe. Unfortunately it’s not that simple. AMD hasn’t changed its MSRPs, which means much of this price gouging is likely dropping into the pockets of Newegg and Amazon resellers, not Sunnyvale itself. Just because AMD hasn’t changed its MSRPs, of course, doesn’t mean it isn’t quietly charging higher wholesale prices, but its ability to claim some of the bubble’s earnings for itself is likely limited by previously agreed-upon contract prices as well as the volatile nature of the market. Add-in board partners (AIBs) won’t pay huge premiums for chips when they know the market for those processors depends on something as volatile as the cryptocurrency markets.

Downstream complications

Beyond making life fun for reviewers, who have to take practical cost considerations into account when evaluating different GPUs, there’s another problem here. AMD’s entire GPU strategy since October of 2013 has relied on steep price cuts to fuel sales. The Radeon R9 290 and R9 290X were killer cards partly because they equaled or bettered Nvidia’s GTX 780 or GTX Titan, but at far lower price points.

At $400, the R9 290 was faster than the GTX 780 — and the GTX 780 is $100 more expensive. When the R9 290 is selling for $600, the entire value equation around AMD’s MSRP’s falls apart. An R9 280X for $489 is an absolutely terrible investment; the Nvidia GTX 780 will demolish that price-performance ratio — but that’s where things sit today.

These price trends are particularly worrisome given that AMD has just launched its new Mantle API. It’s essential that AMD illustrates strong demand for its graphics cards in gaming. GPUs sold into the cryptocurrency market at huge prime premiums could wind up driving gamers away from AMD at the very time Sunnyvale needs to win them over.

That’s not to say we’ll see companies dropping Mantle — it just makes the way forward that much harder for AMD. When it comes to Mantle, a GPU sold to a gamer and a GPU sold to a miner aren’t fungible. The modest positive impact on AMD’s graphics revenue may not be worth the long-term complications or potential loss of market share.