Crypto Mining crash is one of the reasons why GPU Producer Nvidia became the worst performer in S&P 500
The fact that crypto mining profits have dropped significantly made an impact on Nvidia, a company that produces graphics processing units in Taiwan. The fourth quarter of 2018 was characterized by a huge drop in the stock price of its shares. It resulted in a 54% decrease and incredible sale of its shares that put […]
The fact that crypto mining profits have dropped significantly made an impact on Nvidia, a company that produces graphics processing units in Taiwan. The fourth quarter of 2018 was characterized by a huge drop in the stock price of its shares. It resulted in a 54% decrease and incredible sale of its shares that put the company on to the last place among The worst performers in the S&P 500.
Only two years was enough for a company to increase its market value by a dozen and reach the figure of $175 billion. The reason for that was incredible popularity of the company GPUs required for the development of AI and growth of crypto mining industry. The first quarter of the previous year was successful as it managed to be profitable, but the second quarter featured a ⅔ decrease in sales to the crypto mining individuals and companies.
Nvidia explained that the third quarter of the previous year brought about much fewer sales, but the fourth quarter has shown much worse results as the blockchain industry has not acquired any GPUs at all. Jensen Huang, CEO of the company, commented on this situation and told that it reflected the abundance of inventory purchased during the crypto boom.
He also mentioned that such a drop in sales to crypto miners led to a “crypto hangover” experienced by the company. Fortunately for a company, the demand for the company GPUs when the crypto industry was at its heights resulted in the significant increase in the cost of Nvidia products, but even such a grew lack of sales could not drive these prices down.
However, not only a drop in crypto sales is connected with Nvidia black Lind. Wall Street Journal admitted that the company did not manage to meet its expectations, and despite a 58% increase in revenue, the company shares lose their prices with every new day.
At the same time, not only Nvidia was performing badly during the year. If to analyze Nvidia and other leading hardware producers like AMD, for example, their PHLX Semiconductor Index has fallen by 20.37% within 3 months only. The decrease in the price of AMD shares was also over 45%.
Hardware that was used in crypto mining has also experienced a great decrease in price. If to compare the price of Radeon RX580 GPU from AMD, its price has lost 67% of its peak cost spotted at the beginning of 2018. It used to be sold for $550, but its current price is only $180.
A significant drop in the crypto market and minimum of profitability led to the situation when many miners give up this process. There are several Chinese companies that had to sell their hardware at a very low price to be able to mitigate the loss they experienced. It was estimated that profits received from mining nowadays are not enough to pay for the electricity and other costs involved.