Since the beginning of the year, cryptocurrencies like Bitcoin and Ethereum have skyrocketed in value, adding billions in market cap and increasing in value by huge factors. The precipitous growth of the industry has been so pronounced, in fact, that analysts both within and outside of the industry have speculated that cryptocurrencies are a bubble that will eventually pop and that the market will crash. On the other hand, though, there are proponents of the crypto space who believe (or hope, at least) that cryptocurrencies are here to stay. The CEO of Nvidia (NVDA), the graphics card manufacturer, falls into the latter category.
Nvidia Sees Spike in Earnings Thanks to Crypto Mining
It is perhaps unsurprising that Jen-Hsun Huang, CEO of Nvidia, is optimistic about the future of the cryptocurrency world; Nvidia has benefited greatly from the recent spike in cryptocurrency mining around the globe. As mining operations have taken off, and particularly because individuals can set up their own computer systems to mine for most cryptocurrencies, demand for high-power graphics cards has taken off. In many markets, top graphics cards have sold out entirely, with prices skyrocketing as a result. Nvidia has reaped the benefits: its second-quarter earnings jumped up 56% year over year, and its GPU division took in a whopping $1.9 billion during the second quarter alone. That is a rise of 59% in comparison with the same time period a year previously.
Huang explained to VentureBeat that “cryptocurrency and blockchain are here to stay. Over time, it will become quite large. It is very clear that new currencies will come to market. It’s clear the GPU is fantastic at cryptography. The GPU is really quite well positioned.”
Impartial Assessment or Wishful Thinking?
Huang is not the only GPU maker to weigh in on the future of cryptocurrencies, and the diagnosis is far from unanimous. Rival Advanced Micro Devices, Inc. (AMD) is less bullish on the prospect of cryptocurrencies going forward. In fact, AMD CEO Lisa Su suggested that her company does not predict a long-term future for sales of their products to the mining market. Still, though, they would plan to “continue to watch the developments” in the space, according to CoinDesk.
In the past several months, demand for graphics cards has grown significantly. Miners require top processing capacity in order to add new transaction blocks to any of the top blockchains. Their reward for solving those complicated math problems is newly minted coins or tokens. GPUs are specifically used to mine cryptocurrencies including Ethereum or Litecoin, as these are based on a hashing algorithm called “scrypt.” Bitcoin operates with another set of procedures and is generated using dedicated hardware known as ASICs.