Nvidia cites limited insight into crypto mining’s impact on Q2 results
Graphics card giant Nvidia CFO Colette Kress says the company has not been able to estimate reduced demand for crypto mining affected its Q2 results, which were lower than analysts’ expectations on Wednesday.
The chip giant released its financial results for the three months ended July 31, which revealed a 19% quarter-on-quarter drop in revenue to $6.5 billion, while net income fell 59% to $656 million.
Revenue for the gaming division, which includes sales of high-end GPUs, fell 44% in revenue from the previous quarter to $2.04 billion, which Nvidia attributed to “challenging market conditions.”
Kress, who also serves as executive vice president of the company, said Nvidia has a limited view of how the crypto market affects demand for its gaming products:
“Our GPUs are capable of mining cryptocurrency, although we have limited insight into how much this affects our overall GPU demand.”
“We are unable to quantify exactly to what extent reduced cryptocurrency mining contributed to the drop in gaming demand,” she added.
While the chip giant’s graphics processing units (GPUs) were designed for gaming purposes, high demand for crypto mining activities in recent years has contributed to a 320% increase in the company’s share price over the past five years.
However, Kress said that falling crypto prices and changes in the consensus mechanism have in the past affected the demand for the products and the ability to estimate it:
“Volatility in the cryptocurrency market – such as falls in cryptocurrency prices or changes in the method of verifying transactions, including proof of work or proof of stake – has in the past affected, and may in the future affect, demand for our products and our ability to accurately forecast it.”
With the Ethereum Merge scheduled for September 15th, the network’s consensus change to proof-of-stake could further reduce the demand for cryptomining hardware. This could cause problems for cryptocurrency mining products like Nvidia’s CMP170 HX, which currently costs around $4,695.
Related: Nvidia pays $5.5 million as part of SEC case over ‘inadequate disclosures’ surrounding crypto mining
That said, cryptocurrencies such as Bitcoin (BTC), Litecoin (LTC), Monero (XMR) and Dogecoin (DOGE) are among the networks still operating on proof-of-work consensus mechanisms with no observable plans to transition in the future.
Nvidia’s share price has also fallen 5.89% over the past five days on the Nasdaq.