Cryptocurrency News

Nvidia Worst Performer in S&P 500 post-Crypto Mining Crash


As we had reported recently about the continuous fall in the Bitcoin mining with the difficulty level dropping to over 7%, this fall has hit many of the Crypto mining companies hard.

One of those is the Taiwan- based graphics processing unit (GPU) producer, Nvidia, which is hit hard due to the extreme fall in the crypto mining profitability. The effect of this was also seen in the stock market with Nvidia’s share price experiencing a massive fall of over 54% in Q4 2018, thereby making it the worst performer in the S&P 500 as per a CNBC report dated December 21.

In the past two years since 2016 till September 2018 as the demand for Nvidia’s GPUs in artificial intelligence (AI) and cryptocurrency mining grew, its market value also grew significantly from $14 billion to $175 billion. For the first time in May, the firm had reported its profits from crypto mining while forecasting a drop-in sales by over 65% to miners for Q2.

Nvidia CEO Jensen Huang said that the company’s “near-term results reflect excess channel inventory post the cryptocurrency boom, which will be corrected.” Nvidia had originally forecasted immaterial crypto mining-related sales in Q3, while the quarterly report in November exposed the GPU sales for blockchain-related applications had almost become negligible and was at the verge of disappearing.

Further, according to Huang the disappearance of crypto-related sales has left the company with a “crypto hangover.” The cryptocurrency rage moved up the prices for Nvidia’s GPUs, but once that demand faded the prices started falling gradually without giving a chance to the customers to exit.

As per CNBC, in addition to the fall in crypto mining sales, Nvidia’s data center segment failed to meet Wall Street expectations, even though revenue grew by 58 percent. Nvidia stock was down 4.09 percent, closing at $129.57 at the time of writing this article.

Not only Nvidia, but the entire Chip stocks have also had a bad year. The PHLX Semiconductor Index, which tracks major hardware producers like Nvidia and Advanced Micro Systems (AMD) is down 20.37 percent over the last three months. AMD’s share price is down 45.42 percent over the same period.

Radeon RX580, AMD’s popular graphics processing unit (GPU), which was at one point in time was sold at an average price of around $550 in February 2018, is down by over 67 percent and is now being sold for $180.

As per few of the local reports, the earnings from mining are even no longer sufficient to cover electricity and other associated costs. This has also led to the exit of some miners from the business in this current bear market. In fact, mining firms in China have been selling off their old hardware by kilogram in order to cut down their losses further.

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