The world’s largest graphic card and chip maker Nvidia has officially put an end to its crypto venture, with the official announcement of its CFO Colette Kress.
In a statement, Kress said:
“We believe we’ve reached a normal period as we’re looking forward to essentially no cryptocurrency as we move forward. Our revenue outlook had anticipated cryptocurrency-specific products declining to approximately $100 million, while actual crypto-specific product revenue was $18 million, and we now expect a negligible contribution going forward.”
Jensen Huang, the CEO at Nvidia, echoed the negative sentiment of Kress, adding that the profitability of its cryptocurrency-focused mining chips has declined substantially, as the price of cryptocurrencies moved to a downward trend.
Bitmain’s $1 Billion Profit
In July, CCN reported that Bitmain, the biggest conglomerate in the cryptocurrency sector valued at $19 billion, recorded a profit of $1.1 billion in the first quarter of 2018, generating approximately 65 times the profit recorded by Nvidia’s cryptocurrency venture.
Interestingly, Bitmain recorded a profit of $1.1 billion in the first three months of 2018, while Nvidia generated a profit of $550 million, exactly 50 percent of Bitmain’s. Despite being the biggest graphic card and chip manufacturer in the global market, Nvidia was not able to surpass the profitability of Bitmain.
Hence, the argument that Nvidia’s cryptocurrency venture is struggling due to the downtrend in the crypto market is inaccurate, primarily because Bitmain, which essentially conducts a similar operation as Nvidia’s cryptocurrency arm, recorded a larger profit than all of the operations of Nvidia combined.
Also, while the prices of major cryptocurrencies have fallen significantly by more than 70 percent on average, the hash rate of Bitcoin and other proof-of-work (PoW) blockchain networks has increased substantially in the past eight months, demonstrating stable growth.
Simply put, given that the demand for cryptocurrency mining is at an all-time high and mining equipment manufacturers like Bitmain, Canaan, and Samsung are seeing rapid progress in their growth, the declining performance of Nvidia’s cryptocurrency venture cannot be attributed to the general trend of the crypto market.
What’s Really the Issue?
The core problem with Nvidia’s cryptocurrency arm is that the demand for GPU mining has declined. There is only a handful of tokens and cryptocurrencies which miners can produce with GPU miners, because of the lack of computing power in the chips used to create graphic cards.
ASIC mining chips or mining equipment that are developed specifically to mine cryptocurrencies, are being improved at an exponential rate by the key players in the cryptocurrency mining sector, and as such, it is difficult for miners to rely on graphic cards and chips that are not designed to mine crypto to produce digital assets.
Conclusively, the profitability of Nvidia’s cryptocurrency venture was not affected by the decline in the demand for cryptocurrency mining and digital assets in general, but rather the decline in interest towards GPU miners and graphic cards for mining cryptocurrencies, due to their inefficiency in comparison to ASIC miners.
Images from Shutterstock
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