Nvidia banking on Miners for growth?

Nvidia expects $50 million in revenue in Q1 of 2022 from a new mining product. Ethereum mining didn’t contribute to the Q4 revenue of 2020 as much as gaming and data center segments, with gaming bringing in $2.5 billion.

Nvidia recently announced that they would be releasing a new Crypto Mining Processor (CMP) due to crypto miners purchasing their limited supply. To know more read Nvidia Graphics Cards Redesigned. 

Nvidia: What is it?

Nvidia is an American multinational technology company that makes graphics processing units for the gaming and professional markets, as well as a system on a chip unit for the mobile computing and automotive market.

Nvidia reported a total of $5 billion in revenue for Q4 2020, implying mining sales represented 2%-6% of the total. They estimated crypto mining contributed $100 million to $300 million to its gaming segment. The accurate value is hard to track due to gaming GPUs being sold to graphics card manufacturers and then going onto distribution, confirmed by CFO Colette Kress. 

“Q4 was another record quarter, capping a breakout year for NVIDIA’s computing platforms. Our pioneering work in accelerated computing has led to gaming becoming the world’s most popular entertainment, to supercomputing being democratized for all researchers, and to AI emerging as the most important force in technology,” said Jensen Huang, founder, and CEO of NVIDIA

Cryptocurrency mining has led to shortages in the supply of chips. Back in 2016 when Nvidia launched the 10-series graphics cards, there were massive shortages due to the bitcoin boom. Miners were buying up cards to set up massive farms and the average consumer, professional or gamer had to pay through their nose to get a card from a scalper. We are in a similar situation right now. With another crypto boom, miners are buying up even more cards and scalpers are reigning with more stock than some stores out there. Right now, to get an RTX 3070 at its manufacturer recommended price of 500 dollars, the average consumer would have to wait for a minimum of 2 weeks on a wait-list and then maybe have the chance to buy the card. All over the internet, people on boards like r/hardware are having these problems. The bigger problem here is the massive mining areas that get set up with 100s of cards .

Nvidia hopes to alleviate this shortage with the new CMP. The CMP will be released in March and will directly be sold to industrial miners. Nvidia’s CMP processors will be available in the first and second quarter through partners such as ASUS, Colorful, EVGA, Gigabyte, MSI, Palit, and PC Partner.

“Cryptocurrencies have recently started to be accepted by companies and financial institutions and show increased signs of staying power,” Kress said. “CMP products will let us gain some visibility into the contribution of crypto mining to our overall revenue.”

Nvidia’s acknowledgement of the specific opportunity in Crypto is probably another sign of the acceptance of Crypto being here to stay. Expect more and more providers to consider the segment as a specific segment to target in coming months, instead of ignoring it .