Chip and graphics card maker Nvidia has raised its estimate of revenue in the first quarter of 2022 from sales of its new cryptocurrency mining processor, also known as CMP.
The indicator increased from the previously expected $ 50 million to $ 150 million, that is, the forecast has tripled. The device itself was first announced in February this year, and it is designed for Ethereum mining. Let’s talk about the situation in more detail.
Let’s start with an explanation. According to the statements of the representatives of Nvidia, the video cards of the «green» manufacturer are primarily intended for gamers, that is, game lovers. However, due to the wide capabilities of the devices, they are also actively used by miners, who first recoup the cost of the equipment, and then turn into a plus and continue to earn. As a result, the current growth of the cryptocurrency market provoked a real mining boom, which made it almost impossible to purchase video cards – at least at the stated price.
Nvidia representatives tried to solve the problem, but were defeated. They decided to limit the performance of new video cards when mining cryptocurrencies, which in theory should have made them less attractive for mining coins.
However, in theory, they themselves made it possible to bypass their own limitations using special drivers. As a result, the new Nvidia RTX 3060 was able to dig Ethereum to its maximum potential.
At the same time as limiting the performance of the RTX 3060, the manufacturer introduced a dedicated ETH mining device called the Nvidia CMP. It was the popularity of the latter that forced employees to reconsider their projected future profits.
Nvidia’s financial results break records
The revenue forecast is made against the backdrop of skyrocketing global demand for graphics chips during the COVID-19 pandemic. At the same time, representatives of Nvidia said that the company’s total revenue in the first quarter, including sales of CMP, will be higher than the earlier forecast of $ 5.3 billion.
Here is a statement from Nvidia’s CFO Colette Kress on the matter, in which he shared the company’s position. The cue is from Decrypt.
Overall demand remains very high and continues to outstrip supply, while equipment inventories are fairly small. We expect demand to continue to outpace supply for most of this year.
Accordingly, the company’s analysts do not doubt the prospects of their devices and their popularity among cryptocurrency miners. Moreover, the forecast is in fact relevant throughout the year, so Nvidia representatives probably also see the great potential of cryptocurrencies and the possibilities for their popularization all over the world.
At the February launch of CMP, Nvidia representatives explained that the company’s new product targets “the special needs of Ethereum mining” and does not meet the specifications required for a GeForce GPU. That is, the distribution of CMP should not in any way affect the market for gaming video cards from Nvidia, which, in theory, should fix the problem of the shortage of video cards on the market.
However, in the end it was not possible to cope with it. Newer graphics cards – especially those from the RTX 30 lineup – are still very difficult to acquire. In addition, the devices in stock are significantly more expensive than the recommended prices.
It is easy to understand the reasons for what is happening. To do this, just look at the growing rate of Ethereum, which set a record of $ 2,400 the day before. Since cryptocurrency is one of the most profitable coins for mining, the rise in its value is forcing miners to become even more active.
We believe that Nvidia’s increase in projected financial results in this case is a positive for the cryptocurrency industry. This decision of the giant’s analysts makes it possible to count on the further popularization of mining, which already breaks all records.
For example, on November 18, 2020, there were 11 thousand miners on the 2Miners mining pool. Now the number of users exceeds 57 thousand. The most popular coin among miners is Ethereum ETH, which is «mined» by 32.5 thousand people. Based on Nvidia’s expectations, this is far from the limit for the industry as a whole.
