It seems like people aren’t feeling crypto, anymore.
Bottom line effects on crypto traders and miners who churn out the tokens have been measurable. For large corporations who reaped the benefits of being in the space, the falloff is more measurable.
Astutely aware of this, these companies are making changes. This includes those that benefited miners by supplying them with the necessary chips they need to do their jobs, like Nvidia and AMD.
We Don’t Need These, Anymore
Nvidia was one of the leaders during the crypto-mining boom. There are just 21 million bitcoins to mine, and the handsome rewards for solving the puzzles to produce crypto attracted miners in droves. They became among Nvidia’s top customers.
Nvidia was ambitious in trying to meet the demand. This week, it had to admit that the chip inventory it built up was needless. It will be cleared out during this quarter. It added that the move was in response to fizzling demand.
Nvidia’s CFO Colette Kress spoke to analysts and investors about the matter. She said that as it works to reduce the stockpile of unsold parts, Nvidia remains confident about its revenue outlook. The company’s fiscal forecast for 2020 is still on track.
The outlook anticipates revenue will be flat or slightly down from last year, likely by four percent.
Keeping the Numbers Hush, Hush
Nvidia has not given specifics about how its overall profits have been hurt by declines in the crypto market. However, CCN reported earlier this year about how analysts have been able to crunch numbers.
The company reported $602 million crypto-related revenue, but RBC analyst Mitch Steves says the figure is at least three times higher. He explains:
We think NVDA generated $1.95 billion in total revenue related to crypto/blockchain. This compares to the company’s statement that it generated around $602 million over the same time period.
Steves narrowed the numbers for Nvidia’s crypto-mining equipment manufacturing business. He found that from April 2017 to July 2018, the amount was roughly $2.75 billion.
We may never know the exact numbers, but the company appears out of the crypto business for now.
The Aggravation Factor
While the crypto space proved challenging for Nvidia’s crypto-tailored GPU sales, the company also found savvy miners only aggravated the situation.
The overall demand for GPU mining has been on the decline. This is because of the increasing efficiency of ASIC miners and a declining number of miners utilizing GPUs to extract crypto.
The trend of mining has switched from individual miners to mining centers and pools, which gradually led to a decline in interest towards GPU miners.
Nvidia is joining competitor Advanced Micro Devices (AMD) in finding new opportunities for its chips. During this week’s Game Developer Conference, Alphabet announced it had chosen AMD for its new cloud-based video game streaming service.
Called Stadia, the service is thought to be a game changer for AMD. It provides the company “considerable” exposure in the rapidly evolving cloud gaming market:
The selection of AMD GPU by Google, one of the prominent hyperscalers, is expected to challenge NVIDIA’s NVDA dominance in the GPU, as well as the datacenter market.
Gamers will now be able to stream games without the need for consoles or high-powered graphics chips.