NVIDIA’s Crypto Mining Boom Faces Decline: Insights from RBC
RBC Capital forecasts a drop in demand for NVIDIA GPUs as a new algorithm is set to reduce the need for crypto mining.
Over the past year, NVIDIA Corp. (NVDA) has seen its stock price surge, partly fueled by its significant role in cryptocurrency mining. However, according to an analyst at RBC Capital, this lucrative phase is nearing its end.
NVIDIA manufactures graphics processing units (GPUs) that are essential for cryptocurrency mining, a process that supports blockchain networks. The soaring prices of bitcoin and other digital currencies have driven high demand for these chips. Yet, Mitch Steves from RBC Capital highlights that the profitability of mining using NVIDIA’s or Advanced Micro Devices Inc.’s (AMD) hardware is diminishing rapidly.
Steves points out that the upcoming implementation of a “proof-of-stake” algorithm, expected by year-end, will transform the Ethereum blockchain by eliminating the need for traditional mining. This shift means that even specialized GPU mining chips will no longer generate revenue or value.
Short-Term Outlook and Market Impact
Despite this, Steves maintains an outperform rating on NVIDIA, noting that there could be a temporary spike in demand as customers replenish their inventories, potentially boosting the company’s next quarterly results. However, he anticipates a decline in demand for the quarter ending in July, with crypto mining activity no longer driving growth.
Meanwhile, Bitcoin’s price showed a 4% recovery on Monday, reaching $8,702.47 against the U.S. dollar, despite reports that Twitter Inc. (TWTR) is contemplating restrictions on crypto-related content, similar to recent policies by Alphabet Inc. (GOOGL) and Meta Platforms Inc. (FB).
NVIDIA’s shares have climbed 133% over the last year and gained approximately 11.5% in the past month. The company is set to announce its quarterly earnings on May 9.
Note: Investing in cryptocurrencies and Initial Coin Offerings (ICOs) carries significant risks and speculative elements. This article is not investment advice from Investopedia or its author. Individual financial situations vary, so consulting a qualified professional before making investment decisions is essential. The author does not hold any cryptocurrency or related assets as of this writing.
If you have news tips for Investopedia reporters, please contact us at tips@investopedia.com.
Discover the latest news and current events in Company News as of 24-03-2018. The article titled " NVIDIA’s Crypto Mining Boom Faces Decline: Insights from RBC " provides you with the most relevant and reliable information in the Company News field. Each news piece is thoroughly analyzed to deliver valuable insights to our readers.
The information in " NVIDIA’s Crypto Mining Boom Faces Decline: Insights from RBC " helps you make better-informed decisions within the Company News category. Our news articles are continuously updated and adhere to journalistic standards.