The CFO of the graphics card giant Nvidia, Colette Kress says the company has been unable to estimate that lower crypto mining demand has impacted its Q2 results, which fell short of analyst expectations on Wednesday..
The chip giant released its financial results for the three months ended July 31, which revealed a 19% drop in revenue for the quarter.to $6.5 billion, while net income fell 59% to $656 million.
Revenue from its gaming division, which includes sales of its high-end GPUs, fell 44% from the previous quarter to $2.04 billion, which Nvidia attributed to “difficult market conditions.”.
Kress, who is also executive vice president of the company, said that Nvidia has limited visibility into how the cryptocurrency market affects demand for its gaming products:
“Our GPUs are capable of mining cryptocurrencies, although we have limited visibility into the impact this has on our global demand for GPUs.”
“We cannot accurately quantify to what extent the reduction in cryptocurrency mining has contributed to the decline in demand for games,” he added..
Although the chip giant’s graphics processing units (GPUs) were designed for gaming, the high demand for cryptocurrency mining activities in recent years has contributed to a 320% increase in the company’s share price in the last five years.
Nevertheless, Kress said falling cryptocurrency prices and changes to the consensus mechanism have in the past affected demand for his products and the ability to estimate it.:
“Volatility in the cryptocurrency market – such as falling cryptocurrency prices or changes in transaction verification methods, including Proof-of-work or Proof-of-Stake – has in the past impacted , and it may in the future, in the demand for our products and in our ability to estimate it accurately.”
With the Ethereum merger scheduled for September 15, the network consensus shift to Proof-of-Stake could further reduce the demand for cryptocurrency mining hardware.. This could pose a problem for cryptocurrency mining products like Nvidia’s CMP170 HX, which currently costs around $4,695.
Having said that, cryptocurrencies such as bitcoin (BTC), Litecoin (LTC), Monero (XMR) and Dogecoin (DOGE) are among the networks that still operate with Proof-of-work consensus mechanisms with no observable plans for transition in the future.
Nvidia’s price has also fallen 5.89% in the last five days on the Nasdaq.
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