2017 was the year of extraordinary mining profitability. Graphics cards were selling like hotcakes and in response, GPU prices were following suit.
Cryptocurrency mining had gained a bad rap among PC gamers due to the influx of opportunistic crypto miners wanting to cash in on the action.
However, the tides seemingly turned as graphics card giant “Nvidia” has reported a “substantial decline” in revenues. The fall resulting from declining sales of its hardware to cryptocurrency miners.
Announcing their second quarter earnings Thursday, as reported by Coindesk and a number of other outlets, Nvidia CFO, Colette Kress, stated that “GPU business revenue was $2.66 billion, up 40 percent from a year earlier.” So while Nvidia are hardly struggling financially, they are “down 4 percent sequentially.”
The decline in sales for mining rigs is offset by increased sales in Nvidia’s more traditional markets, gaming, datacenter services, and professional visualization applications.
She went on to say;
“Our revenue outlook had anticipated cryptocurrency-specific products declining to approximately $100 million, while actual crypto-specific product revenue was $18 million. Whereas we had previously anticipated cryptocurrency to be meaningful for the year, we are now projecting no contributions going forward.”
Rising Demand Left Gamers Frustrated
The resurgence in demand from Nvidia’s traditional markets, in particular, the high-end gaming rig market, comes as the hardware giant is still trying to adjust to its relatively new and unexpected role in the field of cryptocurrency mining. Over the last few years, demand for powerful GPUs for mining applications has skyrocketed.
In March, Nvidia CEO, Jen-Hsung Huang stated that the company was adjusting its production schedule, ramping things up so that it could meet demand for both miners and gamers.
Gamers have been left frustrated in recent years by the skyrocketing price of cards as mining operators snap up several with each order. A high end gaming rig will usually require, at the most, three graphics cards, and these buyers have represented a small portion of the overall market.
Nvidia continue to maintain that mining has not had a significant impact on the business, and that it has been “hard to quantify” the amount of miners vs gamers buying its hardware.
During previous earnings calls, Nvidia echoed their belief that demand for their cards is still driven primarily by gamers. However, the size of the decline in revenue from a drop in sales to miners tells a different story.