Crypto Mining Hype Has Passed, Claims Nvidia
A recent statement by Nvidia claims that the crypto mining boom might have died down, which was followed by a 6% drop in the GPU giant’s shares.
Revenue from crypto mining products declines
After releasing the reports of its earnings during the second quarter, Nvidia pointed out that the crypto mining hype seems to be at its end. Colette Kress, the company’s Chief Financial Officer, additionally surprised the investors by confirming that the sales have dropped. The firm anticipated that the decline in revenue made by selling crypto-specific products would go down to $100 million. However, the actual revenue was barely $18 million, which was a big surprise to everyone, including the company itself.
Of course, creating crypto-specific products still remains only a small part of the company’s total revenue. Nvidia thrives in creating graphics cards and chips for the gaming industry, and its total revenue went to $3.1 billion in the second quarter. However, the company decided to turn to make products for crypto miners after a lot of their gaming products were used for the purpose of mining digital currencies.
As crypto mining became more popular, Nvidia experienced a significant increase in their sales. After the Bitcoin price went down after the first quarter, Jensen Huang, the company’s Chief Executive, announced his prediction of a drop in sales.
After the company reported $289 million in revenue from crypto-specific products, many analysts predicted that the firm will end the year with around $498 million in revenue. However, after the new development, the company might actually make a lot less than that. When asked if they know how much of their graphics card business was fueled by crypto mining, the company responded that it is hard to tell.
According to them, a lot of gamers might be using their devices for mining at night, while they are sleeping. Because of that, the company is unsure of the purpose for which their products are actually bought.
Is the trend truly over?
After the new announcement of a drop in revenue, the company also experienced a share drop of 6% in after-hours trading. This came as a bit of a surprise, considering that the second quarter actually ended better than many have expected. The new development has also significantly lowered the expectations for the revenue made in the third quarter. While the original expectations were at around $3.34 billion, the current ones have gone down to anywhere from $3.19 billion to $3.32 billion.
Other companies like Advanced Micro Devices Inc. also experienced a decline in earnings, although theirs was less serious. After the initial increase in earnings due to the mining boom, the sales of crypto-specific products went down from making 10% of their total revenue to only 6%.