Nvidia says ‘crypto adds nothing useful to society’ after billions in mining sales

Nvidia’s chief technology officer, Michael Kagan, has expressed a negative view of cryptocurrencies, stating that they do not “bring anything useful to society”, while “AI does”.

Crypto is not “useful to society”

According to Kagan, AI applications like chatbot ChatGPT have more value than mining crypto. Kagan’s comments aren’t too surprising given that Nvidia has a history of distancing itself from the crypto community, such as limiting the ability of its graphics cards to mine Ethereum in 2021.

Kagan doubled down on his anti-crypto stance, stating that he has never believed in blockchain technology.

“I never thought so [crypto] is something that will do something good for humanity.”

Nvidia’s recent crypto past

However, Nvidia’s success in the stock market over the past two years seems to have a correlation to the crypto industry. In 2021, before The Merge, Nvidia released a graphics chip (CMP) that was optimized for Ethereum mining while limiting gaming-focused graphics cards. However, the chips failed to impress as sales were “nominal” and collapsed 77% in Q3 2022.

In addition, Nvidia was fined $5.5 million in May 2022 by the SEC for failing to disclose the number of GPUs sold for mining. The SEC alleged that Nvidia knew the cards were being used for mining but failed to disclose the information, which it said misled investors about the growth of the business. Given that the majority of Nvidia cards were used to mine Ethereum, which transitioned to proof-of-stake at the end of 2022, that’s a fair criticism as demand for the cards disappeared after the merger.

Before the Ethereum merger, which took place on September 15, 2022, revenue for Nvidia gaming GPUs (which mostly still worked for crypto mining after community solutions) fell to $1.57 billion, down from $3.2 billion the previous year. As demand for Ethereum miners fell, so did Nvidia’s sales. In fact, if you look at the Nvidia stock price against the price of Ethereum, both reached all-time highs within a week of each other before falling significantly.

Interestingly, Nvidia CEO Jensen Huang also said back in 2017 that “cryptocurrency and blockchain are here to stay. The market demand for it is going to grow, and over time it will be quite large.”

It appears that Ethereum has now moved to proof-of-stake and the CMP tokens failed to take off; the company has almost completely turned its back on crypto, in line with Kagan’s statements. The company’s focus is on AI research and gaming, with major customers such as Microsoft, Amazon and Oracle purchasing over 36,000 of Nvidia’s AI-focused processors.