Nvidia, the graphics card manufacturer that rode the crypto bull market before being squashed by the bear, have publicly announced that they are on their way to finding stability after a rollercoaster couple of years that has almost mirrored the crypto markets. The GPU hardware makers benefitted hugely off the back of the 2016-17 bull run, but a fifteen-month (so far) bear market has taken its toll on the company’s bottom line. Nevertheless, Nvidia is confident that better times are ahead, both for crypto and the company itself.
The Cost of Crypto
Nvidia’s views on the future of the crypto industry came from Chief Financial Officer Colette Kress who told analysts Tuesday that the chipmaker was close to clearing the supplies of extra GPU chips it had ordered in 2017/18 to meet demand driven by crypto miners, only to see demand fall off a cliff the moment they arrived. This left them with warehouses full of GPU chips, some of them designed specifically for crypto mining, that they have spent the last year slowly shifting. They have nearly cleared this backlog, according to Kress, and have plans in place to cope with any such repeat. As a result the company is confident that a return to its bread and butter, computer gamers, will result in a return to more steady and predictable sales in 2019 and 2020.
Nvidia’s Rocky Ride Continues
Nvidia’s share price mirrored that of Bitcoin for much of 2017, growing exponentially as home mining gained popularity and demand for their mining equipment gathered pace, doubling from $26 in January 2016 to $52 just seven months later. By the peak of the crypto market in early 2018 the price had rocketed to $243, and with results expected to be promising for the following two quarters the price remained high, until the impact of the crypto crash and the over-ordered chips took its toll, and the share price collapsed by 52%. In many ways Nvidia were unwitting accomplices to the crypto boom in 2016-17, but their particular case of FOMO was retrospectively a mistake, and one that could yet have serious consequences. The November 2018 share price collapse wiped $23 billion off the company’s value, leading to a shareholder, Yuju Yang, bringing a lawsuit against the company two months later under the “business judgement rule” – essentially saying the matter was mismanaged to the extent that it constituted a transgression of corporate law. Off the back of 2016-18, how much of a part Nvidia has to play in any forthcoming bull run will be interesting to witness.
