NVIDIA’s failure: processors for mining were not in demand

Gamers’ complaints about the high cost of video cards were heard – NVIDIA (NASDAQ:NVDA) first tried to limit the computing power of devices when finding a hash function, and then released specialized mining devices (CMP). However, the focus failed – sales of CMP (crypto-mining processor) failed.

CMP was supposed to replace the RTX 30 series of video cards, which were out of competition in terms of the efficiency of Ethereum mining and payback periods. So, at the time of its release last fall, the top RTX 3090 was beating off its value after 4 months, and Ethereum, which soared in value, further fueled investment interest in video cards.

The software limitation of computing power did not work, as crypto miners learned to bypass it

Then at the beginning of 2021 NVIDIA released CMP. These devices are a truncated version of video cards with no video output. Since the use of the same processors did not solve the problem with the shortage of chips, and the miners did not bite at a small discount in exchange for the loss of versatility, sales failed.

To make matters worse, CMP turned out to be less effective. With the same power consumption, the top 90HX demonstrates a power of 86 Mh/s, while the RTX 3090 – 121 Mh/s. CMP is 30% cheaper than RTX, but their payback period is at the same level – about a year and a half. This means that with increasing complexity, CMP will retire earlier, while RTX will still make a profit. In addition, at any time, the video card can be used for its intended purpose.

Unsurprisingly, CMP sales fell by 60% in the third fiscal quarter, and the company predicts a further decline in demand. If we take the total volume of realized CMP from video card sales for the same time, then their share will be only 3% or $526 million from $19.3 billion.

The company tried its best to reduce the shortage of video accelerators caused by mining cryptocurrencies, but failed. NVIDIA CFO Colette Kress claims that they do not know how much demand for products is caused by the cryptocurrency market. Nevertheless, video card sales increased by 50% compared to the third quarter of last year, and sales revenue amounted to $3.2 billion.

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