Nvidia sees demand for cooling crypto mine, semiconductor companies reduce revenue forecasts
The crypto bear market and declining demand for crypto mining chips have caused semiconductor companies to close their doors.
Bank of America analysts say that semiconductor declines occur every 3-4 quarters. years, and the industry may well be on the verge of another.
Nvidia Corporation, a major supplier of cryptocurrencies for cryptocurrency and video games, is cutting back on employment as the demand for semiconductors in these two critical sectors declines. While retailers used waiting lists, raffles and quotas to meet consumer demand in the previous two years, falling crypto and stock prices have meant fewer extra dollars for consumers, says a California retailer, Central Computers. Far away are the lines from the pandemic era with consumers camping outside computer stores for mining and gaming hardware for cryptocurrency.
The supply chain’s crunch coming out of China, and the war between Ukraine and Russia have also eroded revenue estimates and estimates for major chip companies such as memory chip maker Micron, CPU specialist Intel and data center specialist Advanced Micro Devices. Record-high inflation levels have cooled consumers’ appetites for smartphones and personal computers.
Nvidia is swimming against the current
Nvidia Graphics Processing Units, which has been a convenient off-the-shelf solution for miners, is also suffering, albeit to a lesser extent than a few years ago.
Crypto miners took up Nvidia’s GPUs in 2017, prompting the multinational to increase production. Nvidia’s mining hardware is mainly used for mining Ethereum. There was a decline in demand as miners moved on to ASICs, chips made specifically for mining with enormous amounts of computing power, and eventually containing parts of unsold chips. The additional problem was that the company had no opportunity to know the composition of the customer base.
Which customers used the GPUs for video games, and which used them for crypto mining? Video players provided a more predictable market cycle, preventing the company from holding large amounts of unsold inventory and weighing down the balance sheet.
In November 2018, the company cut its annual sales forecast to $ 2.7 billion, prompting investors to sell the stock, resulting in a 20% drop in the stock price.
Nvidia then separated its gaming and GPU operations earlier this year, introducing hash speed limits for game-specific hardware, making them ineffective as mining solutions. Because crypto-mining chips require less sophisticated hardware, rejections from GPU lines can be reused. By introducing a cryptospecific chip, the chances of miners dumping them on the secondary market are lower. Therefore, the supply of gaming devices is less likely to exceed demand, which benefits Nvidia’s bottom line.
Cold months ahead
In any case, Nvidia’s share fell 48% in the first half of the year. Analysts estimate that Nvidia’s second-quarter sales will miss original estimates by 4%. Intel’s sales estimates are tied at around $ 18 billion for the second quarter, and are missing original estimates of $ 400 million. It recently participated in the cryptocurrency mining race this year by introducing its BMZ1 and later BMZ2 bitcoin miner chips.
As the crypto markets fall with bitcoin, which has now lost around 70% of its value since the peaks in November last year, profit margins are tightening for miners. Smaller miners capitulate, while others risk having their ASICs sold to repay loans. The longer the crypto winter lasts, the greater the probability that the prices of ASICs for mining will fall as more units appear on the secondary market.
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