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Nvidia: 'Substantial Decline' in GPU Sales from Crypto Miners

Nvidia saw a “substantial decline” in revenue from cryptocurrency miners, the company announced in its second quarter results Thursday.

The chip manufacturer announced its Q2 results Thursday afternoon, noting that graphic processing unit (GPU) sales due to cryptominers had dropped significantly. Commentary by chief financial officer Colette Kress stated that while “GPU business revenue was $2.66 billion, up 40 percent from a year earlier,” it was “down 4 percent sequentially, led by record performance in gaming, professional visualization and datacenter, offsetting a substantial decline in cryptocurrency GPUs.”

She added:

“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.”

Through the rest of the year, she said, “revenue is expected to be $3.25 billion, plus or minus two percent. We are including no contribution from crypto in our revenue outlook.”

The chip producer has seen GPU demand rise over the last year, largely due to cryptominers. Nvidia CEO Jen-Hsun Huang said in March that the company needed to ramp up its production to ensure that both miners and gamers had sufficient graphics cards.

That being said, the company has downplayed the actual impact mining demand has had on its financials. Kress said it was “hard to quantify” how much of its business came from miners versus traditional markets.

During a previous earnings call, an Nvidia representative said the company modeled cryptocurrency profits “approximately flat,” adding that much of the demand for its graphics cards came from the number of “amazing games that are out right now.”

Nvidia image via jejim / Shutterstock

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Crypto Mining Made Up 10% of AMD's Revenue in Q1

Cryptocurrency mining demand accounted for as much as 10% of AMD’s first-quarter revenue this year, according to the chip maker.

“The strength in Radeon products was driven by both gaming and blockchain demand. We believe blockchain was approximately 10% of AMD revenue in Q1 2018,” chief financial officer  said Devinder Kumar during an earnings call on Wednesday after AMD revealed that it made $1.65 billion in first-quarter revenue, a 40% increase year-over-year.

Kumar noted that the combined gaming and blockchain demand contributed to a 95% increase year-over-year for its GPU and computing markets. That said, Kumar indicated that the company believes that it will see a “modest decline in graphics [revenue] due to blockchain.”

All in all, AMD anticipates less than 10% of its 2018 revenue will come from cryptocurrency miners.

“Based on the strength of our business momentum, for the full year 2018, we now expect revenue to increase by mid-20s[%] over 2017, driven by the ramp of our new products. Blockchain revenue to be mid to high-single-digit percentage of revenue for 2018,” he said during the call.

Looking past the figures, however, CEO Lisa Su struck a somewhat optimistic tone for AMD’s prospects in the blockchain infrastructure sector.

She remarked:

“I do think the blockchain infrastructure is here to stay. I think there are numerous currencies. There are numerous applications that are using the blockchain technology. We don’t see a significant risk of secondhand GPUs coming into the market. I think what you find is that, one, there are number of different currencies, and, two, a lot of these users that are buying GPUs these days are actually buying them for multiple use cases, both commercial and consumer.”

“They’re not necessarily buying just for mining,” Su continued. “I think, most people are comparing sort of this blockchain time period to the last one which was a couple of years ago and I think there are a couple of important differences. I think the first one is that there are multiple currencies and multiple applications that are being used. And what we’ve seen is that people who are mining do go from one currency to another depending on what’s happening.”

The only unknown factor at play involves retail sales, as Su said it was “hard to tell” whether retail sales go toward gamers or miners. But even there, AMD believes it has a close approximation of the demand.

“I think the breadth of the blockchain applications and also the breadth of the customer base give us that belief,” she later concluded.

Cryptocurrency mining screen image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.