The next-generation iteration of Ethereum, known as Ethereum 2.0 or Eth2, has been cited by Nvidia as a potential threat to the demand for its graphics card (GPU) products.
On Wednesday, Nvidia announced its financial results for the first quarter of fiscal 2022, reporting an 84 percent year-over-year revenue jump ($ 5.66 billion) and $ 2.76 billion for its gaming unit (106 years). Increase compared to the previous year.
Nvidia believes demand for Nvidia’s GPUs from cryptocurrency miners has benefited $ 2.76 billion, but CFO Colette Kress said in a press release that the company does not understand the full extent of the impact.
“Gaming revenue increased 106 percent year over year and increased 11 percent sequentially. This was driven by higher sales of GeForce GPUs with desktop and laptop records, as well as SOCs for game consoles. We continued to benefit from the strong sales of our GeForce RTXTM 30 Series is based on the NVIDIA Ampere architecture. We believe gaming has also benefited from the demand for cryptocurrency mining, although it is difficult to determine to what extent, “noted Kress.
Longer-term, Nvidia stated in its 10-Q filing with the Securities and Exchange Commission (SEC) that demand from the mining sector could fluctuate depending on the state of the cryptocurrency market. “[c]Changes to cryptocurrency standards and processes, including but not limited to the pending Ethereum 2.0 standard. “
As Nvidia noted:
“The demand and usage of GPUs for cryptocurrency has fluctuated in the past and is likely to continue to change rapidly. Volatility in the cryptocurrency market, including changes in cryptocurrency prices, can affect demand for our products and our ability to drive demand for our products to be valued. Changes to cryptocurrency standards and processes, including but not limited to the upcoming Ethereum 2.0 standard, may also result in increased aftermarket resale of our GPUs and reduce demand for our new GPUs In FY 2022, we believe gaming benefited from the demand for cryptocurrency mining, although to what extent it is difficult to determine. “
The reason for this mindset is that, unlike the current iteration of Ethereum which uses the hardware-intensive proof-of-work validation approach, Eth2 uses a proof-of-stake that does not require GPUs or similar hardware.
According to data collected by The Block Research, ETH miners had sales of more than $ 2 billion in May.
As mentioned earlier, Nvidia has tried to prevent some of its GPU products from being used for mining by throttling hash rate performance. At the same time, a special mining product was launched.
According to Kress, the so-called cryptocurrency mining processors generated sales of $ 155 million – roughly in line with an estimate made in April.