On Thursday, the chip-manufacturing giant Nvida saw its stock tumble on the release of its second quarter earning report, which revealed that the company had overestimated its GPU sales by $82 million. The reason? No one is building cryptocurrency miners anymore, apparently.
Although Nvidia’s report said the company was expecting a decline in GPU sales and “cryptocurrency-specific products” from a peak of $289 million last quarter to about $100 million this quarter, the actual revenue for its crypto-specific products ended up being a mere $18 million. That’s a 93 percent decrease in just three months.
“Whereas we had previously anticipated cryptocurrency to be meaningful for the year, we are now projecting no contributions going forward,” Nvidia’s report reads.
It’s hard to blame Nvidia for its optimistic outlook on chip sales for cryptocurrency mining. Only a year ago, it was damn near impossible to find graphics cards for sale because cryptocurrency miners were buying them in bulk faster than manufacturers could produce them.
It’s uncertain why GPU sales for cryptocurrency applications fell off a cliff, but there are likely two main culprits. For starters, cryptocurrencies are now deep into a bear market. The value of top coins has fallen around 70 percent from their all time high in January. This can make it unprofitable for all but the largest cryptocurrency mines to continue to operate because the cost of electricity is more than the value of the coins being mined.
At the same time, application specific integrated circuits (ASICs), a special type of computer chip that is designed only for cryptocurrency mining, have been developed for a number of cryptocurrencies. As Motherboard previously reported, as soon as ASICs are developed for a specific cryptocurrency it makes mining with GPUs impossible due to the huge gains in efficiency.
It’s too early to say whether this drop in GPU sales signals a larger decline in the relevance of cryptocurrencies or simply reflects changing technology standards within the cryptocurrency space. For the foreseeable future, however, it seems Nvidia is going to fully embrace its “gamers come first” promise.