Lack of profit in crypto mining
According to an RBC analyst, Mitch Steves, in the last quarter a high quality crypto mining GPU was still profitable, but it’s a different case now.
With the current situation in the crypto market, making use of expensive graphics processing units (GPU) to mine digital currencies is becoming more unprofitable.
Looking at the firm’s calculation, the break-even point for ethereum is about $175 an ether. However, Ethereum has lost 87% value this year and are now near $108.
Warnings have also been given by chipmakers about the possibility of perturbation. Ahead following the rise and fall in digital currencies.
Cryptocurrency downturn to persist
Nvidia’s Chief Executive Officer, Jensen Huang, during the company’s third-quarter earnings release commented on the current decline in cryptocurrency saying:
Our near-term results reflect excess channel inventory post the crypto-currency boom, which will be corrected.
He also spoke about the company’s management initially having no expectation about cryptocurrency moving forward in the third quarter.
The RBC analyst spoke from the perspective of his company, saying: “Nvidia and AMD may have expected the bullish period to exist for one quarter, but we believe it’s a two quarter issue”. He cited the new market dynamics as a major reason.
Two-year warranty and more companies entry causing excess GPU mining
Steve aired his view on the reasons for the excess mining of graphics processing units (GPU). Firstly, almost all GPUs are on a two-year warranty. There are tendency to demand for used GPUs which could cause near-term inventory issues.
Secondly, private companies are continuously entering the competition to develop higher-quality chips. Here, he made reference to Bitmain’s new ethereum specific mining chip, claiming it is far superior to any GPU and it’s likely the only product running in the green at this time.
Bullish days ahead
Regardless of AMD and Nvidia current situations, Steves remains bullish about the future. Although, expectations are low on crypto related revenue for another quarter, but the secular trends for both companies remain unchanged.