Is Crypto to blame for tech companies’ woes?

As tech executives are forced to account for falling earnings to investors, a new scapegoat has emerged: crypto.

Philipp Schindler, Google’s chief business officer, partly blamed the company’s growth slowdown on a decline in ad spending by crypto companies during a third-quarter earnings call.

Semiconductor company AMD similarly linked its own revenue disappointment to, among other things, falling demand for graphics processing units (GPUs) that can be used to mine crypto. Revolut, the upstart financial app, said its crypto revenue fell from 30-35% to 5% of the company’s total since 2021.

Crypto has reached a milestone in its institutional adoption journey that most in the space would like to detour around.

“This is the first real quarter where you hear these companies actively bringing up crypto as a reason for lost revenue,” said Griffin McShane, head of insights and communications at MPCH Labs.

But crypto companies had to be intertwined with other tech companies for this revenue shortfall to happen in the first place.

In 2018’s crypto winter, Google exceeded revenue expectations, regardless of whether crypto companies bought ads. But as venture capital and talented young coders created excitement around the potential of blockchain, the rest of the tech economy had no choice but to move to crypto. In 2022, crypto and tech prices tend to move in sync.

“If you run a profit-focused [tech] operation, you have to support blockchain and digital assets, because that seems to be where we are going,” said David Tawil, CEO of ProChain Capital.

Crypto’s transition into the mainstream has been fragmented and marked by unimpressive trading returns in 2022. Bitcoin mining, the original crypto-technology integration, was 80% less profitable on Monday compared to a year ago.

But tech companies appear to be headed in crypto’s direction, despite the revenue headaches. Meta and Reddit integrate NFTs into their platforms. Google Cloud Launches New Partnerships with Ethereum and Solana Communities.

Companies further from Web3 development are likely to be less affected by crypto’s rise and fall. Caterpillar, for example, hasn’t shown much desire to move production to the blockchain, and metaverse real estate doesn’t need heavy equipment to build.

But in the tech sector, a world where every company partially sees itself as a crypto company may not be too far off.

“In a lot of ways, I think we’re already there,” McShane said.

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