Nvidia has decided to exit the crypto mining business due to plummeting crypto mining-related sales. Nvidia is one of the top graphics processing unit (GPU) manufacturers in the world. In 2017, it pulled in USD 9.7 billion of revenue, USD 3.2 billion of profits and had USD 11.2 billion of assets.
The CEO of Nvidia, Colette 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 USD 100 million, while actual crypto-specific product revenue was USD 18 million, and we now expect a negligible contribution going forward.”
At the beginning of crypto mining around 2009, there was only computer processing unit (CPU) mining. However, someone wrote the code to mine with GPUs, which were far more efficient than CPUs. People bought up whatever GPUs they could find to build mining farms, including from Nvidia. Early on, these were tailored for gaming but in recent years, Nvidia had been producing GPUs specifically for crypto mining. This announcement from Nvidia is effectively stating that they will no longer produce GPUs specifically for crypto mining, although miners will still be able to buy those built for gaming and mine crypto with them.
This decision is the result of two important factors. First off, the crypto markets hit their peak in December 2017 and January 2018 when Bitcoin hit USD 20,000, and other cryptos rallied heavily as well. Now the crypto markets are in a recession, with Bitcoin below USD 7,000. This factor has made crypto mining with GPUs much less profitable, and for most mining operations, electricity costs more than the revenue.
The second factor is rising mining difficulty. Companies that specifically design cryptocurrency mining equipment have developed application specific integrated circuits (ASICs) for most cryptocurrencies that used to be GPU or CPU only, including SHA-256, Scrypt and X11. It is very difficult to find any cryptocurrency that is ASIC resistant, since if a crypto gets popular enough then a mining manufacturer will spend the time to develop an ASIC for that crypto. This is because ASICs perform much better in terms of hash rate and energy efficiency.
The combined result of rising difficulty from the proliferation of ASICs and decreasing crypto price has made GPU farms an unprofitable venture for the most part. This has caused GPU miners to liquidate their hardware to get some cash instead of continuing to mine, causing a massive crash in GPU prices.
Nvidia had been preparing to sell crypto mining GPUs long term and acquired a large stash but now people are trying to sell the ones they have and generally not buying new GPUs from the manufacturer. Nvidia actually has 1 million units of surplus due to the unexpected crash of the crypto markets, forcing them to slash prices and delaying the release of newer, better models until the surplus is sold off.
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