AMD’s share price surges in the wake of increased demand for its GPUs among bitcoin miners

The surge has taken short sellers of the stock by surprise.

On Tuesday, boosted by a strong demand for its GPUs, the share prices of Advanced Micro Devices (AMD) surged by 9% leaving short sellers low and dry.

The rise in AMD’s stock price can be linked to a rally in Ethereum, a cryptocurrency, which demand high GPU processing power to “mine” it. As a result AMD’s processors have been sold out on retailer’s websites, including

Mining cryptocurrencies involves using networks of computers to validate transactions and prevent counterfeiting by solving complex mathematical problems. As a reward for solving the problem a new currency is awarded to the computer operator.

Since the dawn of bitcoins in 2009, mining cryptocurrencies have become increasingly popular. Recent surges in the price of Bitcoins have kindled increased interest in digital currencies.

“We think economics suggests that GPUs continue to be sold out. We think GPU demand will remain robust as long as the return is under (about) one year,” wrote Mitch Steves, an analyst at RBC, in a note to clients.

As of Monday, short sellers of AMD had parked nearly $15 million for 2017. Tuesday’s surge in its share price has left them at a loss of $125 million, according to S3 Partners, a financial analytics firm.

This is on top of losses over $700 million from last year’s AMD short sellers.

“There are going to be a lot of traders saying, ‘This is the last straw. I’m out,'” said Ihor Dusaniwsky, S3’s managing director of research.

Drew Prairie, AMD’s spokesman acknowledged that interest from cryptocurrency miners was a factor in the demand for the company’s GPUs, however he stressed that game enthusiasts are the core market.

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