The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Intel Stock Forecast: Cryptocurrency Mining with Intel

Summary:

Intel and Microsoft are collaborating to bring blockchain framework for enterprise computing. However, Intel still needs to prove its Coco Framework is as efficient as the blockchain transactions used in cryptocurrency.

Intel must first demonstrate that it can make an impact on the $150 billion cryptocurrency market before it can impress anyone with its Coco Framework.

Intel has licensed GPU IP from Nvidia. Intel owns Nervana Systems which ASIC for its AI processor chip. GPU is best for Ethereum mining. ASIC is best for Bitcoin mining.

Nvidia and AMD, the duopoly on discrete GPU sales, enjoy a solid tailwind from cryptocurrency mining.

The old but still dynamic Wintel duo of Intel (INTC) and Microsoft (MSFT) are collaborating to develop and deliver blockchain technology to the enterprise level. If you ever dabbled or researched Bitcoin before then you know what blockchain is. Blockchain started as a decentralized database of continuous digital transactions of Bitcoin and other cryptocurrencies.

Intel’s blockchain idea, Intel SGX (Software Guard Extensions) aims to build a secured blockchain implementation for enterprise computing, not cryptocurrency mining. As you can see from the screenshot below, Intel SGX is based on Intel’s x86 processor hardware. SGX is therefore just another attempt to improve the sales of Intel’s Xeon server processor chips.

(Source: Intel)

Why Intel Should Get Involved In Cryptocurrency Mining Hardware

The cryptocurrency industry is now worth more than $150 billion. Intel has compelling reasons to supply the hardware for mining current and future cryptocurrencies. Microsoft’s contribution to Intel’s push for blockchain enterprise adoption is its software design, Coco Framework . Intel’s SGX is the hardware platform for Microsoft’s Coco Framework for enterprise implementation of blockchain distributed database technology.

Coco (short for Confidential Consortium) is based on Ethereum blockchain design. Ethereum is the blockchain platform behind Ether, the no.2 most valuable cryptocurrency. Intel SGX helps Coco deliver faster and more secure processing of digital transactions.

(Source: Microsoft)

Microsoft taking inspiration from Ethereum should also inspire Intel to think about getting involved in the hardware market for cryptocurrency mining rigs. Ether is a GPU-only mineable cryptocurrency. Intel has licensed the GPU IP of Nvidia and it is marketing its integrated Processor graphics for accelerating artificial intelligence services. However, I see future economic benefits if Intel also starts marketing its integrated GPUs for mining cryptocurrencies.

The massive valuation of Bitcoin ($78 billion) and Ethereum ($36.5 billion) cryptocurrencies means millions of people are probably going to buy lots of GPU and ASIC mining rigs. My view is there will be endless iterations of cryptocurrencies that can replace Bitcoin and Ethereum once mining them is no longer possible. Ripple, Litecoin, Ethereum, and Bitcoin Cash were developed after Bitcoin mining became difficult to mine.

My thesis now is that Intel should first get involved in cryptocurrency mining hardware before it starts selling SGX and Coco Framework for enterprise applications. The $150 billion cryptocurrency global market is why Advanced Micro Devices (AMD) and Nvidia (NVDA) enjoy super-high valuations. These duopoly on GPUs have sky-high stock prices because of Ether’s massive surge in price starting last April.

How Intel Can Compete In GPU-only Cryptocurrency Mining

Polaris Radeon and Pascal GeForce GPUs are always out of stock because Ethereum miners are buying all available units. AMD and Nvidia are fabless semiconductor firms and their foundry partners cannot meet the intense demand for GPU products. Intel has its own fabs. It can rig up a mining rig with multiple integrated Intel Iris Plus 650 video accelerators for the cryptocurrency hardware industry.

Nvidia cross-licensing its GeForce GPU IP to Intel means Intel’s Gen.9 integrated laptop GPUs are now as good as Nvidia’s own mobile integrated GPUs. The desktop Kaby Lake-era Intel Gen.9 Iris integrated GPU can do 75 frames per second on Watch Dogs 2 full HD 1920×1080 settings. My point is that Intel touts competent integrated GPUs for gaming, deep learning inference acceleration, and cryptocurrency mining.

(Source: notebookcheck.net)

Mining Ethereum and other GPU-only cryptocurrencies only require compatibility with OpenCL. Intel’s integrated GPUs were already used in Bitcoin mining during its early days. The only was superceded when discrete GPUs and then ASIC-based mining rigs became the most economical hardware set-up to mine Bitcoins. Intel can focus on GPU-only currencies like Ether and Monero for its integrated GPUs.

A $299 Ethereum mining board with 20 embedded Intel Iris Plus 650 and 32GB DDR4 RAM should be able to do compete with the cheapest but efficient discrete GPUs for Ethereum mining. Intel is an expert manufacturer of computer motherboards. If Asustek can cram 19 PCie slots for 19 Mining discrete GPUs in its B250 Mining Expert Motherboard, Intel can easily cram 190 embedded Iris Plus 650 GPUs in a regular PC motherboard.

Conclusion

I am long and rate INTC as a buy. Getting involved in the cryptocurrency mining hardware market might just boost INTC’s price like it did with AMD and NVDA. The rising competition from Ryzen and EPYC processors of Advanced Micro Devices requires Intel to find new markets for its products. I have presented a great expansion opportunity for Intel in cryptocurrency mining hardware. Its Nvidia-licensed integrated Iris GPUs are good enough for Ethereum mining that can exploit the persistent short supply of top-mining GPUs like Nvidia GTX 1070 and AMD Radeon RX 480/580.

Furthermore, Intel also owns Nervana Systems. Nervana’s AI processor is based on ASIC (Application-Specific Integrated Circuit). Like I mentioned earlier, Bitcoin mining is best done through ASIC setup. I don’t know how much Nervana’s revenue is. However, I think Intel can increase the return of its investment when it bought Nervana by requiring that firm to also build a cryptocurrency mining ASIC.

Bitcoin Cash is a new altcoin (launched only last July) that can be mined with ASIC processors. Bitcoin Cash now has a global market capitalization of $9.8 billion.

(Source: coinmarketcap.com)

Intel can create optimized GPU mining rigs for Ether. Nervana Systems can create optimized ASIC mining rigs for Bitcoin Cash.

My buy rating for INTC is in line with its positive near and long-term algorithmic forecasts from I Know First.

Based on monthly technical indicators and moving averages trend signals, INTC still has an overall buy rating too.

Past I Know First Forecast Success with INTC

I Know First has been bullish on Intel shares in past forecasts. On April 15, 2015, an I Know First Analyst wrote about Intel. In the article, it said that in the face of declining PC sales, Intel has been focusing on other markets to reduce its dependence on this one. Since then, Intel shares have risen 9.88% in line with the I Know First algorithm’s forecast. See chart below.

(Source: Google Finance: INTC)

This bullish forecast for INTC was sent to I Know First subscribers on on April 15, 2015. To subscribe today click here.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.