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The drastic decrease in the profitability of cryptocurrencies has hit the producers of GPU (Graphics Processing Unit) such as Nvidia, based in Taiwan. In the fourth quarter of 2018, the company recorded a massive sell-off of its shares, cutting its stock price by 54 percent and making it the worst for the S & P 500, according to reports by CNBC on December 21st. .
From 2016 to September 2018, Nvidia's market value increased sharply from $ 14 billion to $ 175 billion due to the growth in demand for GPUs in the field of artificial intelligence (AI) and cryptocurrencies. In May, the company reported its revenue from mining encryption for the first time while forecasting a two-thirds decline in sales to miners for the second quarter.
Initially, Nvidia had predicted insignificant crypto-crypt sales in the third quarter, while the November quarterly report revealed that GPU sales for blockchain-related applications had almost disappeared. Nvidia's CEO, Jensen Huang, said the "short-term results of the company reflect the excess inventory of channels after the cryptocurrency boom, which will be corrected."
The disappearance of cryptographic sales has left the company with a "hangover crypt," according to Huang. The craze of cryptocurrency pushed Nvidia's GPU prices up, but once the demand disappeared, prices did not decline quickly enough to attract customers who were expecting cheaper cards.
In addition to the shrinking sales of crypto, the Nvidia data center segment failed to meet Wall Street expectations, although revenue rose by 58 percent, according to CNBC. Today, the Nvidia stock is down 4.09 percent, closing at $ 129.57.
Chip stocks in general have performed poorly this year. The PHLX Semiconductor index, which tracks the leading hardware manufacturers such as Nvidia and Advanced Micro Systems (AMD), is down 20.37% in the last three months. The share price of AMD is down 45.42% over the same period.
The excessive hardware of the post-mining boom saw a significant drop in prices. AMD's famous Radeon RX580 graphics processing unit (GPU), widely used by cryptographic miners, is now sold for $ 180, down 67% from an average peak price of around $ 550 in February 2018.
The decrease in profitability in the current bear market has led to the escape of some miners. Some mining companies in China have sold dated hardware that has reached the closing price of the kilogram in order to mitigate its losses. According to local reports, earnings from mining activities are no longer sufficient to cover electricity and other associated costs.
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