Nvidia’s Crypto Revenue Dwindles Despite Strong Q4 Results

Global chip manufacturer Nvidia recently released its fourth-quarter earnings report for 2021. The communique revealed that the company managed to beat analyst expectations, providing a solid outlook for the current quarter. 

Nvidia’s Graphics Processor in Heavy Demand

Nvidia has seen a surge in demand for its graphics processor from cloud providers and businesses which require it for artificial intelligence applications. Some of these programs include speech recognition and recommendation.  In the last quarter, the chipmaker had announced that Meta, which recently lost people’s trust, would use its chips for AI research.

Consequently, Nvidia reported revenue of $3.26 billion from its data center division, up 71% year-over-year(YOY). With gaming still its biggest forte, its latest GeForce processors have become the go-to for playing advanced computer games. As per the report, the gaming department went up 37% YOY to $3.42 billion, this growth was driven purely by GeForce sales.

Also, its Professional Visualization business rose 109% annually to $643 million. The company said the growth was driven by workstation chip sales and hybrid working used by business applications like computer-assisted design and rendering. However, Nvidia’s automotive business was down 14% to $125 million. Supply constraints that also plagued Tesla in its earning report were cited as the reason for the fall in sales.

Nvidia’s stock price has also caused considerable cheer amongst its investors. The shares price rallied in 2021, but it is currently down by about 10%, with investors looking for safer investments amidst the all-time high inflation. However, some of these shareholders expressed their delight in its overall performance in the popular r/stocks subreddit.

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Nvidia’s Crypto Minning Business Performs Poorly

Despite Nvidia’s generally impressive performance, its crypto mining division did not perform as expected. The chipmaker said that most of its GPUs have software that prevents their use for cryptocurrency mining. Instead, miners are expected to purchase specialized mining processors. 

The Q4 report showed that it sold $550 million crypto-specific cards in fiscal 2022 and only $24 million in the fourth quarter. This performance was far below analysts’ expectations, especially as it started well.

The data indicates that revenue dropped over 77% from $105 million to $24 million. This is owing to variables such as a shift away from proof-of-work mining operations toward the energy-efficient proof-of-stake. The reduction also coincided with other chipmakers, like Intel, entering the crypto mining industry. Notably, Intel said their latest mining processor is 1,000 times faster than regular SHA-256 chips. Finally, Nvidia also mentioned crypto volatility as a possible factor for demand reduction.

“Volatility  in  the  cryptocurrency  market  including  changes  in  the  prices  of  cryptocurrencies  or  method  of  verifying transactions, such as proof of work or proof of stake, can impact demand for our products and our ability to accurately estimate it.”

Following the release of the Q4 earnings, Nvidia’s stock price fell by almost 7% from $229 to $213 per share. However, it has rebounded and as of press time was trading at ~$240.

Do you see Nvidia’s crypto mining revenue rebounding even as more cryptocurrencies move from proof of work to proof of stake model? Let us know your thoughts in the comments below.