Mark Weaden
Nvidia was forced to create Ethereum mining chips to ensure gamers weren’t priced out of the market by mining organizations.
Nvidia saw its stock damaged as the production of Ethereum mining chips missed projected earnings by $134 million. The soaring price of the cryptocurrency market has meant that a growing number of crypto miners are trying to get hold of high-powered CPUs and graphics cards for mining rigs.
Nvidia Ethereum computer chip
Nvidia is the world’s biggest computer chip manufacturer and began producing cryptocurrency mining processors, in order to try and quell the number of miners buying out gaming equipment. Nvidia GeForce graphics cards are designed for gamers and the company has been concerned with losing customers, as the miners keep buying out all the equipment and driving the price up, forcing gamers to look elsewhere for hardware.
Based on the demand, Nvidia expected the mining equipment would make $400 in sales but fell short only generating $266 million in the second quarter. However, things might change in the third quarter, as Ethereum trading has increased dramatically since the end of the bear run.
The second quarter came at the same time as the major drop in prices across all cryptocurrencies, which would have meant there was a far lower demand for Ethereum miners. Either way, Nvidia’s business reported $1 billion in profit.
Gaming community unhappy
Nvidia's core demographic is gamers, but the community was less than impressed with how miners were driving up the price of cards. Graphics cards and GPU processors had extremely high prices, sometimes three or four times higher than the norm.
Nvidia decided to reduce the hash rate of its GeForce graphic card range, making them less useful to miners whilst maintaining the quality gamers would see on their screens. Miners then turned to Nvidia’s CMP line, which is incapable of creating visuals. The CMP products are designed for mining, offering extremely high processing power and boasting excellent ventilation.
Ethereum is undergoing a variety of updates, the latest being the London Fork which will be followed by the Shanghai update. Ethereum is switching to a Proof-of-Stake protocol, meaning it will be more environmentally friendly, as it edges towards Ethereum 2.0. During this period, Ethereum will move away from mining entirely, which doesn’t bode well for Nvidia stock as cryptocurrency continues to cause problems.
