PC gaming is still more important than cryptocurrencies for revenue

In February, when cryptocurrency prices soared, Nvidia launched new processors specifically for cryptocurrency mining. They cannot power a computer monitor, but they can generate valuable ether coins.

On Wednesday, the company provided an update on how its cryptocurrency cards, or CMPs, are doing in the market. It booked $ 155 million in CMP card revenue in its fiscal first quarter, which ended May 2, and expected sales of $ 400 million in the current quarter, impressive numbers for a new product line.

But Nvidia CEO Jensen Huang speaks of the new product line not as an exciting frontier for the company, but as a bone for crypto freaks to protect gamers. It turns out that gaming processors, Nvidia’s original and core business, are still the biggest, generating $ 2.76 billion in revenue, a 106% increase from last year.

The reason Nvidia is now dabbling in encryption chips is to save the supply of graphics processing units, or GPUs, for gamers, Huang explained. While GPUs can be used for mining, CMP chips cannot be used for gaming and it is easier for Nvidia to make CMP chips.

The CEO says his main gaming market is the largest ever and he can’t risk missing out because crypto miners keep buying cards meant for gamers.

“What we hope is that the CMPs satisfy the miners and remain in the professional mines” and the product “protects” the supply of graphics cards for gamers, Huang said in a call with analysts.

“The gaming industry is really big, and what’s really exciting besides that is that games are not just games anymore. They are infused in sports, esports. They are infused into art. They are infused on social media. great cultural impact now. It’s the greatest form of entertainment, and I think the experience we’re going through is going to last a while, ”Jensen said.

Hard to find

It’s not easy to find one of Nvidia’s new GeForce RTX 30 series graphics cards.

The cards retail for as low as $ 399 and cost up to $ 1,499, depending on configuration, but consumers rarely find one online at those prices.

Short supply and high demand mean they fly off the shelves when in stock, and when they’re not, buyers pay a hefty premium, sometimes more than double the list price, at a reseller.

Huge demand for GeForce graphics cards was the main reason Nvidia’s sales soared in the first quarter, increasing 84% to $ 5.66 billion, beating Wall Street and the company’s own expectations.

Who buys these cards?

There may simply be a massive demand for PC games, partially accelerated due to the Covid-19 pandemic, as well as a global shortage of microchip manufacturing capacity.

But it’s also possible that these cards are being bought by cryptocurrency miners, who can turn a graphics card’s troubleshooting ability into significant amounts of ether, a cryptocurrency that has hit several all-time highs this year.

Nvidia isn’t sure. Chief Financial Officer Colette Kress said it is “difficult to determine to what extent” cryptocurrency miners contributed to her gaming division.

But he wants to unravel the question. Nvidia is starting to add software to its game cards to make mining difficult.

In the past five years, Nvidia shares have risen more than 1,200%, bolstered by the company’s expertise in graphics processors, which were originally intended for gaming, but are now at the heart of some of the most exciting fields in the world. the technology.

Because Nvidia first commercialized the GPU, investors flocked to the stock in hopes that Nvidia would sell those chips to autonomous car companies, cloud computing providers (particularly for artificial intelligence applications), and, more recently, cryptocurrency miners.

None of these businesses have really exploded. Nvidia still has an auto business, but it was down 1% and generated just $ 154 million, less than revenue from CMP cards in the first quarter alone. Sales for its data center business grew 79%, but much of that came from an acquisition last year.

Meanwhile, Nvidia insists it still sees high demand from gamers that won’t end anytime soon. A look at social media threads about new graphics card sales reveals dozens of gamers frustrated at not being able to get one. Nvidia’s 30 series cards are a bigger update than most years, with new technologies like ray tracing, and Nvidia is at the beginning of its cycle.

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