Over the last couple of months, many companies in the crypto space closed shop while others suffered huge losses. The bear market seems to be the scapegoat for most organizations such as Nvidia.
These companies claim that the decrease in cryptocurrency activities caused them to lose more than they anticipated. While this might be true for crypto-based companies, others are taking advantage of the situation to hide their mismanagement.
Nvidia blames declining crypto activities
Nvidia, a chip and manufacturing company, is in the spotlight after its market cap recently dropped by more than $23 billion. According to reports, Nvidia stocks fell by 20% last week, between Thursday and Friday. Many were quick to attribute the overnight downward surge to the bear market that caused a decrease in demand for cryptocurrencies.
Similarly, the CEO of Nvidia commentated on the drop. He claimed that the struggle of the company is mainly due to the bear market. He added that the company did not anticipate that the situation would last this long. The company claims that many miners sold their mining rigs due to the substantial cost involved in cryptocurrency mining, especially with the current crypto prices. According to Nvidia, this unleashed a flood of second-hand mining chips
Cryptocurrency is Not to Be Blamed
However, it seems that cryptocurrencies are not to blame. According to reports, Nvidia emphasized that GPU sales to crypto miners were lower than the previous quarter. Nvidia CFO Colette Kress reported that the second quarter earnings call held in August. She added that the company would no longer expect any contributions from its venture in cryptocurrencies.
In a statement made by Kress, it seems Nvidia made an erroneous revenue forecast. She added:
“Our revenue outlook anticipated cryptocurrency-specific products declining to approximately $100 million, while actual crypto-specific product revenue was $18 million. Whereas we had previously anticipated cryptocurrency to be meaningful for the year, we are now projecting no contributions going forward.”
Many experts focused on crypto rather than the company’s miscalculations in revenue forecasting. CNBC Mad Money’s Jim Cramer stated:
“I believe Nvidia made an honest forecasting error, even though some of us saw it coming, it was an avoidable mistake,”
Some experts like Goldman Sachs analyst Toshiya Hari believe the fall is due to other factors. He states that the stock price of Nvidia sank mainly due to its mid-range gaming GPU inventory and a correction of in-game console SoCs.
Generally, the demand for GPU mining has declined because of an increasing efficiency of ASIC miners. In addition, there is a declining number of miners using the GPUs to mine cryptocurrencies.
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