For the first time ever since the cryptocurrency boom in the beginning of 2018, NVIDIA Corporation, one of the world’s leaders in GPU computing, revealed the revenue it made from chip sales to the cryptocurrency market. However, it predicts that this figure will drop significantly in the second quarter of 2018.
GPU manufacturers faced an unprecedented level of demand in the the beginning of the year following the astronomical gains in Bitcoin’s price in 2017. During its earnings conference call on Thursday, NVIDIA reported that it has recorded over $289 million in sales revenue in Q1 2018 alone. However, due to the recurring market crashes, NVIDIA said that “crypto sales will probably fall by about two-thirds in the current fiscal quarter.”
The official sales revenue report was almost 30% higher than the projection by Christopher Rolland, an analyst from Susquehanna, who estimated the crypto sales to be about $200 million. Nvidia Chief Executive Officer Jensen Huang addressed the reason behind the unusually high sales revenue in a conference call.
“Crypto miners bought a lot of our GPUs in the quarter and it drove prices up. I think that a lot of gamers weren’t able to buy into the new GeForce as a result.”
How Cryptocurrency Mining Led to the 2017 GPU Shortage
The cryptocurrency boom in late 2017 not only increased the price of Bitcoin, it also increased the average mining difficulty of the digital currency. According to data from BitcoinWisdom, the Bitcoin mining difficulty one year ago today was at 559,970,892,890 units; fast forward 12 months, the difficulty has skyrocketed to 4,138,123,233,246 units, nearly 8 times what the difficulty was just a year ago.
The increasing Bitcoin mining difficulty also meant that the hash power of a regular laptop is no longer enough to ensure a profitable mining experience. 5 years ago, miners were able to make almost $2 worth of Bitcoin daily with a regular laptop; today, they won’t even be able to make half of that amount in a year with that same laptop.
To stay on top of the game, miners started purchasing GPU Graphics Cards like the Nvidia GeForce GTX 1070 and the AMD Radeon RX 580 to increase their hash power. As a result, the price of these graphics cards inflated to unprecedented levels, thanks to the 2017 GPU shortage.