Tuesday, March 13th 2018
NVIDIA Bracing for a Cryptocurrency Demand Drop
In what could bring cheers to PC gamers, and tears to miners, NVIDIA is reportedly wary of a possible drop in cryptocurrencies through 2018. This directly affects the company, since GPUs are used in mining various cryptocurrencies, which triggered inflation in prices of graphics cards from Q2-2017 to Q1-2018. Over the past couple of weeks, prices of popular high-end GPUs such as the GeForce GTX 1080 Ti have cooled, although not back to their original levels. NVIDIA's manufacturing division, which sub-contracts silicon fabrication to TSMC, is calculating the impact a cryptocurrency slump could have on its supply-chain, and are being conservative with their orders to the foundry. A drop in demand could leave the company with vast amounts of unsold inventories based on an old-generation architecture (Pascal, in the wake of Volta/Ampere), which could result in multi-billion-dollar inventory write-offs. According to a Digitimes report, NVIDIA has placed restrictions on its add-in card (AIC) partners on marketing cryptocurrency mining abilities of their graphics cards, and selling directly to large miners.
In addition to a slump in demand for cryptocurrencies, 2018 could see introduction of purpose-built crypto-mining ASICs that are tailored for popular cryptocurrencies. Purpose-built ASICs tend to be extremely economical for medium-thru-large scale miners, in comparison to GPUs. The third horseman is policy. While several governments around the world have developed an appreciation for blockchain technology for its resilience to tampering, fraud, and data-theft (which could be implemented in safekeeping government- and bank-records); governments are, understandably, anti-cryptocurrency, as it undermines sovereign legal tender issued by central banks, and aids tax-evasion. Several governments through 2017-18 have announced measures to crack down on cryptocurrency mining and use as tender. This has led to a further drop in public interest in cryptocurrencies, as large ICO investors are weary of losing money in a highly volatile market. Close to half the ICOs have failed.
Source:
DigiTimes
In addition to a slump in demand for cryptocurrencies, 2018 could see introduction of purpose-built crypto-mining ASICs that are tailored for popular cryptocurrencies. Purpose-built ASICs tend to be extremely economical for medium-thru-large scale miners, in comparison to GPUs. The third horseman is policy. While several governments around the world have developed an appreciation for blockchain technology for its resilience to tampering, fraud, and data-theft (which could be implemented in safekeeping government- and bank-records); governments are, understandably, anti-cryptocurrency, as it undermines sovereign legal tender issued by central banks, and aids tax-evasion. Several governments through 2017-18 have announced measures to crack down on cryptocurrency mining and use as tender. This has led to a further drop in public interest in cryptocurrencies, as large ICO investors are weary of losing money in a highly volatile market. Close to half the ICOs have failed.
38 Comments on NVIDIA Bracing for a Cryptocurrency Demand Drop
Unfortunately though as soon as you talk anything about cryptocurrency, people that don't understand it immediately jump to assuming that you are an idiot putting your entire 401k into Dogecoin...
I'm fairly certain Wall Street investors know very well though that NV and AMD's income would drop over the artificially inflated revenue of the last couple years if the the crypto gold rush crashed, and that the odds of a crash are pretty high. That's something that they've factored in stock price for sure.
I only hope that it cools off before 2080 cards hit the market so they are "cheap" but the rumor mill of $1500 for a card has got to be false or I will never see one, and most people can't even bare $600.
The GTX 9xx series, I originally grabbed a Zotac 980Ti AMP! Omega for $669 shortly after they came out. Once the GTX 10xx was coming out and EOL was given to the 9xx the exact same card I picked up for $549 new (from what I can find, MSRP on FE 980Ti is $649) which is $100 under MSRP.
GTX 1070 MSRP is $349. One of the cheaper ones I find is at MicroCenter for $549.99 - still $200 over MSRP! If Volta comes out within the next 3-6 months and current GPU prices don't come down, people are going to hold out for the new Volta cards and then Pascal cards will start going out used while a lot of new stock is still available. Nvidia should be worried about getting stuck with a lot of Pascal inventory if things persist as they are. So, 1 of 2 things needs to happen:
1) Prices need to drop all around to help clear out the EOL inventory of Pascal (10xx series) and this will only happen if crypto drops enough. I personally don't know anyone that's going to drop hundreds of dollars over MSPR on an EOL GPU.
OR
2) Crypto needs to take off again and press out another spike of high demand for GPUs. Granted, this is not the option gamers want, but this would be the most ideal one for Nvidia and even AMD. Thus allowing Nvidia to put a halt to manufacturing Pascal GPUs and allow inventory to go out as fast as possible to fill orders so they're not stuck with oodles of GPUs
currently a gpu can be looked upon as an asset subject to supply and demand factors.. if a ton of perfectly usable ex mining cards hit the market all at once the asset price will crash..
second hand or new it dosnt matter.. its all affected..
trog
1080Ti on 7nm will be shrinked to 1/3 of its original size, 471/3 ~~ 150mm2, so yeah brace for 2050Ti.
All in all, I found his coverage refreshingly neutral. Wut.
This would make them useless for gaming and these cards could never flood the market when the mining craze slumps.
from a sellers point of view its a f-cking disaster just waiting to happen.. he he
trog
Long-term trend is still upwards for cryptocurrencies. Good luck telling people with 100s of GPUs that they should sell and quit mining ... not gonna happen. Us crypto enthusiasts and general computer nerds are a stubborn crowd, fixed in our ways. Looking back at history, very few "legal tender" backed by "a stable government" have lasted longer than 50 years. The average life expectancy for government-issued currency is only 27 years. Most currencies get eroded by inflation or corruption, even the US dollar has only 1/20th the purchasing power it once had (see St. Louis FRED chart here -- fred.stlouisfed.org/series/CUUR0000SA0R)
Clearly there is an issue with a central authority when it comes to currency, which is eliminated in most cryptocurrencies. I agree, a lot of cryptos will fail over the long term, but so will many fiat currency offered by the majority of countries around the world.
But releasing totally new cards will have two massively important benefits for nVidia, if one of the cards is aimed at the crypto mining market and can significantly beat AMD's current offering which lets face is very old tech now so should easily be possible (I have an AMD R9 290 from 2013 and it still matches pretty much anything out on the market today for ETH) it would kill AMD graphics at least until Navi in 2019 and so increase nVidia's own sales hugely but the other important benefit is it would go someway to protect nVidia against a crypto mining crash. If suddenly the crypto market stopped mining, total market collapse, maybe some environmental law was passed or a new coin suddenly comes out that is better than anything else and doesn't use mining (IOTA or similar) then the market would be flooded with cheap second hand cards. But if nVidia was already selling much faster, brand new cards with full warranties then most gamers would buy their new cards rather than a old, slower card that has been mined within an inch of its life 24/7 for the last 2 or 3 years, plus they could sit on this stock much longer as its only just come on the market and so has a 2-3 year life.
I think this is the only way that gamers and miners will get some cards at normal prices. I know nVidia has tried to say they are focusing on gamers but they are a company wanting to make money like any other and miners are (were) willing to pay 2x or 3x the price and want to buy 10x to 100x more cards than gamers so they will not ignore them. I believe nVidia will release a mining card (Turing is a perfect code name) and a gaming card (maybe Ampere based), they might release them/one at GTC in March or it might be GamesCon in August, I know rumours are now Q3 but nVidia are missing out of so many sales by waiting i'm just not sure they will as there is no competition at all until Q1 - Q2 2019 when AMD's 7nm Navi might be arriving, nVidia could make an insane amount of hay if they use this time wisely and can get production even close to the level demand is currently at.