American technology company NVIDIA released its Q3 2018 earnings report on November 15, 2018, which states that the company’s graphics processing units (GPU) sales among cryptocurrency miners has plummeted a great deal since Q4 2017 cryptocurrency boom.
Demand for Crypto Mining GPU Withers
According to the report, NVIDIA earned $3.18 billion in revenue for Q3 ended October 28, 2018. This is a massive upturn of 21 percent compared to $2.64 billion in Q3 2017, and also by 2 percent compared to $3.12 billion in Q2 2018.
Discussing the crypto business segment, NVIDIA founder and CEO, Jensen Huang, stated:
“Near-term results reflect excess channel inventory post the cryptocurrency boom, which will be corrected.”
Unsold GPU inventory piling up with retailers and distributors added to the mounting costs for the company, as the demand for crypto mining chips vanished after the crypto frenzy simmered down earlier this year. This had a direct bearing on the company’s share price, as it tumbled by almost 17 percent to $168.32.
Speaking to Reuters, Huang said “the crypto hangover lasted longer than we expected. We thought we had done a better job managing the cryptocurrency dynamics.”
Substantiating on the disappointing sales of the company’s GPU mining chips, Huang said the cryptocurrency craze drove the gaming card’s demand by a large extent. Consequently, excess demand led to a rise in the price of NVIDIA’s gaming cards, which didn’t bode too well with some of the customers. Subsequently, the price of cards came down as the crypto market saw a considerable decline during the end of Q1 2018.
Low prices led NVIDIA to believe that the sales of gaming cards would shoot up again. However, things didn’t turn out as expected, as customer demand didn’t immediately follow the decline in the price of GPU cards.
This unexpected result was evident in the company’s Q3 2018 report, as its provision for inventory rose to $70 million in the quarter. The company’s gross margin also fell by 1.8 percent to 60.4 percent in Q3.
Crypto Mining no Longer Profitable
Lately, miners have had a tough time in the nascent digital currencies industry. According to recent reports, cryptocurrency mining seems to no longer be a lucrative side-business. In case of NVIDIA, their cryptocurrency mining business segment has had quite an eventful 2018. BTCManager reported on May 14, 2018, that at its peak, crypto mining accounted for as much as 9 percent of NVIDIA’s total Q1 revenue.