Nvidia, a graphics card manufacturer heavyweight, said low cryptocurrency mining demand is to blame for its missed second quarter financial target. The chip maker released its Q2 financial report on August 24. Nvidia’s revenue dipped by 19% compared to the previous quarter to reach $6.5 billion. Its net income stood at 656 million US dollars after a 59% drop.
Sales of the company’s top-of-the-range gaming graphics cards reduced by 44 percent compared to Q1 to reach slightly above two billion USD. According to the chip maker, a “challenging” cryptocurrency mining space contributed to the poor Q2 performance compared to Q1.
Colette Kress, Nvidia’s chief financial officer, disclosed that while the company’s graphics cards can mine virtual currencies, the company cannot comprehensively estimate how much the demand in the crypto sector affects Nvidia’s “overall GPU demand.”
As such, they were “unable to accurately quantify” how much low cryptocurrency mining activities crossed over to cause low demand in the gaming sector. Although the company primarily targeted gamers, their high-end GPUs have found a way into the crypto sector, contributing more than 3X of the company’s profits in the last five years.
Kress observed that plummeting cryptocurrency prices also contributed to the drop in demand for mining graphics cards. The CFO added that blockchain platforms migrating from consensus mechanisms requiring GPUs and other specialized hardware to verify transactions significantly affect its earnings.
The CFO was referring to the likes of Ethereum. Ethereum is in the final stages of abandoning a proof of work (PoW) for a proof of stake (PoS) consensus mechanism. The change will likely reduce the market demand for the company’s mining-specific cards, whose prices can reach 4,500 USD. Apart from declining Q2 earnings, the company’s share price on Nasdaq fell by nearly six percent within five days.