NVidia Corporation, which has been around since 25 years, has contributed majorly to the computer graphic industry. The massive growth of the gaming industry and its ravenous desire for procuring life-like graphics has been satiated by the expertise of the numerous experts at U.S. based tech hub NVidia. Not only this, NVidia has also been the provider of crypto mining hardware. However, in recent reports it has been brought to attention that where the demand for the crypto mining hardware has declined due to high volatility and decreased value, the tech giant will still see an increased revenue in this quarter.
Earlier in May this year, the company generated $289 million from selling high computing machinery to the crypto miners. This was the first time NVidia made any of its financial matters public. The estimate made by Susquehanna Christopher Rolland about crypto sales, which was amounted to be $200 million was surpassed by the original revenue. In a conference call, NVidia Chief Executive Officer Jensen Huang said,
Crypto miners bought a lot of our GPUs in the quarter and it drove prices up, I think that a lot of gamers weren’t able to buy into the new GeForce as a result.
However, due to high volatility of Bitcoin and several other cryptocurrencies, the incentive to mine the cryptocurrencies has not decreased. This has had no toll on the number of sales of the mining equipment. It was reported that Gaming revenue, was up 68% from a year ago and down 1% sequentially. It was suggested that the sale to the crypto industry would likely decrease by the next quarter. Contrary to what was reported, the number of crypto miners all over the world is still increasing.
Even though the sales of crypto mining hardware are predicted to take a dip, NVidia’s revenue from gaming sector is expected to grow by 47% to $1.75 billion on a year-on-year basis while data-center revenue is estimated to increase to 78% to $740 million. C.J. Muse an analyst at Evercore, also provided his insight on the matter and said that,
Data Center/AI remains an area of strength, particularly when considering additional benefit of a new gaming cycle favoring NVidia.
Earlier in July along with the prices of GPU the value of cryptocurrencies also took a major hit. Bitcoin’s price has plunged from nearly $19,500 in December to about $6,100 today. Ethereum’s prices fell from a high of $1,385 in January to about $318 today.
Similarly, the GPU market has seen a downfall in the prices of the equipment they have been providing. For example, AMD’s top-end OEM 4GB RX 580 six-pack which was priced for $3,600 is now selling for $2,500. The NVIDIA GeForce GTX 1080 Founders Edition, 8GB GDDR5X PCI Express 3.0 Graphics Card that was previously available $1,050 then can now be purchased for $709. This was previously predicted in an assessment by Jon Peddie Research. C. Robert Dow, manager of digital media at Jon Peddie Research, said in an email,
We have predicted a drop in [application specific processors] as [digital] currencies prices dropped. The cost to run the mining rigs is not insignificant, so when the price for the currencies drop…, people will run rigs and choose to dump AIBs on the secondary market hoping to recover some cost.
C.J. Muse further added,
We believe concerns around a likely falloff from cryptocurrency-driven Ethereum GPU mining strength are largely exaggerated, and NVidia will likely power through any tough compares from cryptocurrency-driven tailwinds.
Even though the recent developments have proved that NVidia’s revenue will be affected by the changes in value of cryptocurrencies, the company remains hopeful that due to the existence of the numerous other services it provides to the gaming industry, they’ll remain at the top of their game. The AI technology has grown far beyond its stage of infancy and is producing newer use cases every day.
As for major takeaways, our sense is management believes that investors still severely underestimates the impact of AI and the size of the potential market, We are only at the cusp of AI’s growth potential and NVIDIA is creating THE AI computing industry standard C.J. Muse
To conclude, the ever increasing demand for the provision of spectacular graphics in the gaming industry still persists. NVidia, which initially was the provider of the technology, might migrate back to its original creation due to the descent in the value of cryptocurrencies.