The drastic drop in the profitability of cryptocurrency mining has hit hard-hit graphic processing device manufacturers (GPUs) such as Nvidia based in Taiwan. In the fourth quarter of 2018, the company saw a massive sale of its shares, which reduced the share price by 54 percent and made it the worst player in the S&P 500, reports CNBC on December 21.
From 2016 to September 2018, Nvidia's market value increased dramatically from $ 14 billion to $ 175 billion, as demand for its GPUs rose in artificial intelligence (AI) and cryptocurrency mining. In May, the company reported its criptomineria earnings for the first time, while expecting a two-thirds decline in sales for miners in the second quarter.
For the time being, Nvidia expects insignificant sales related to cryptocurrency mining in the third quarter, while the quarterly report in November showed that GPU sales to block-chai related applications had disappeared. Nvidia CEO Jensen Huang said the company's "short-term results reflect excess inventory of the channel after the cryptocurrency boom, which will be corrected."
The declining sales of cryptographic baskets has left the company a "crypto-hangover", according to Huang. The Cryptocurrency frenzy increased Nvidia GPU prices, but when demand disappeared, prices did not drop fast enough to attract customers expecting more affordable cards.
In addition to the fall in crypt sales, Nvidia's data center segment did not meet Wall Street expectations, although revenues increased by 58 percent, according to CNBC. Today, the shares in Nvidia have fallen 4.09 percent and ended at 129.57 USD.
Shares of chips have generally had a low performance this year. The PHLX semiconductor index, which records major hardware manufacturers such as Nvidia and Advanced Micro Systems (AMD), has declined 20.37 percent over the last three months. The price of AMD shares decreased by 45.42 per cent in the same period.
The surplus of hardware in the post-mining boom has seen a marked drop in prices. The popular graphics processing device Radeon RX580 (GPU) from AMD, widely used by criptomineros, now sells for $ 180, 67 percent less than a maximum average price of about $ 550 in February 2018.
The decline in profitability on the current bear market has caused some miners to abandon the company. Some mining companies in China have sold outdated hardware that has reached the closing price per month. Kilo to mitigate his losses. According to local reports, the surplus from mining is no longer sufficient to cover electricity and other related costs.