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A sharp decline in the demand for cryptocurrency miners has, since April, been causing serious concerns among mining hardware manufacturers and graphics cards manufacturers, including Nvidia.
The huge dip in crypto market rates at the beginning of the year is believed to have scared off a large number of potential users, consequently lowering demand.
There has been a growing number of negative events affecting the industry. These range from cryptocurrency exchange hacks to increased government regulation, exacerbating the problem.
Low mining profitability, highly volatile cryptocurrency prices, and suspected price manipulation schemes have led many speculative miners and investors to become more skeptical about the industry.
As a result, the month of April saw a 40 percent market decline in the GPU industry. This left graphics card manufacturers like Nvidia grappling with inventory issues caused by overproduction.
The 2017 Mining Craze Affect on Nvidia Supply
2017 saw a sharp increase in GPU demand due to the crypto-mining craze fueled by the cryptocurrency price upsurge. The hype led to major growth within the industry, with companies such as Gigabyte and Nvidia making record sales.
Gigabyte, in particular, sold about 4.5 million graphics card units last year, one million more than what it sold in 2016. Company profits also soared to $67.37 million.
With crypto mining-hardware demand now weakened, GPU companies such as the Taiwan Semiconductor Manufacturing Co (TSMC), a major microchip manufacturer, have downgraded revenue estimates.
According to TSMC, which makes chips for tech behemoths Apple Inc, Nvidia Corp, Qualcomm Inc, and Bitcoin mining-hardware giant, Bitmain, among others, demand for crypto miners will secede during the third quarter of the year.
As a result, the company has lowered its 2018 revenue predictions from US$11.5-12 billion to US$10-10.5 billion. According to Business Insider, the company saw a 9 percent increase in profits in its April-June quarter period as compared to last year.
This was following the increased demand for its high-end mining chips, which pushed up revenues to $7.85 billion and net profits to $2.3 billion.
TSMC had previously indicated that the growing demand for mining-hardware would continue into the second quarter, with growth expected to peak at about 15 percent. The diminishing demand for its 28-nanometer mining hardware is said to have cut down forecasted growth figures.
In a statement issued by TSMC’s senior vice president and chief financial officer, Lora Ho, the company’s second quarter performance is likely to be affected by the seasonal demand for smartphone chips.
She also revealed that the company is working on a new TSMC 7-nanometer integrated-circuits technology line designed to meet changing user trends in the cryptocurrency mining world.
Source: ELIZABETH GAIL || coincentral.com
Image Credit: Nvidia