The News: NVIDIA on Thursday announced it will release a new series of semiconductors specifically for mining ether, the second-largest digital cryptocurrency.
The new chip type is called CMP, or Cryptocurrency Mining Processor. Read the full news piece from CNBC.
Analyst Take: This is a quick but noteworthy topic that caught a decent amount of headlines. The media attention is threefold.
- NVIDIA’s momentum warrants attention to everything the company does.
- Crypto is a business media headline du jour as we watch Bitcoin surge past $50,000.
- NVIDIA is also suffering from the global chip shortage that has been a major news cycle and has major consumer, business, and national security implications.
Interestingly enough, the CMP that was announced wasn’t for bitcoin, but rather Ethereum, the very cool little brother of Bitcoin, which has also recently soared to new highs, usurping $1,900.00.
NVIDIA recognized that certain features and capabilities of their powerful RTX GPUs were quite useful for miners. This recognition drove what must have been material demand for RTX to be used in Ethereum mining efforts. With supply limited and demand surging for RTX GPUs, NVIDIA saw the opportunity to tweak the upcoming RTX 3060 to be less efficient for mining Ethereum. Furthermore, the CMP cards don’t do graphics. Mining Ethereum doesn’t require the capability, but miners continue to dampen supply by purchasing the cards leaving gamers in the cold.
Bottom line, the demand for crypto mining technologies like the CMP will continue to gather momentum as the crypto gold rush continues. However, disrupting the supply of graphics cards to its loyal gaming community would hardly benefit NVIDIA. The approach of specializing in managing use archetypes better while also not wasting graphics cards for something that doesn’t require them is a wise move.
Demand for blockchain and crypto, much like gaming, won’t subside anytime soon. NVIDIA generates hundreds of millions of dollars annually, according to its reporting. There is a strong case for the company to draft off this momentum and do so with even greater precision.
In the meantime, taking care of its gaming community during a time of supply constraints is equally essential; Making this launch even more sensible and timely. I expect the targeted CMP solutions to expand and drive additional revenue to NVIDIA as it puts more customization and capabilities into the offering to support the needs of a growing global focus on cryptocurrency.
Futurum Research provides industry research and analysis. These columns are for educational purposes only and should not be considered in any way investment advice.