Nvidia’s CEO, speaking at a recent conference in Tel Aviv, said that the company had no prior intention of venturing into the cryptocurrency market. Calcalistech reports that after the decline of cryptocurrency prices, the American chip manufacturing giant has suffered setbacks in the last quarter of 2018.
Nvidia Licks Wounds after Cryptocurrency Price Decline
Jensen Huang, CEO of Nvidia Corporation, recently disclosed that the company never had plans to venture into the virtual currency sector. According to a report by Calcalistech, Huang’s statement revealed that the company was not ready for the industry.
The CEO, however, tried to sound optimistic for the virtual currency sector, saying:
“I believe that cryptocurrency has a place. I hope that it will find different algorithms that are a little bit less computationally intensive, and maybe they won’t need our GPUs in the future, but I do believe cryptocurrency has a place.”
The chip manufacturing giant experienced a boom in sales when the demand for chips was high. With the cryptocurrency price boom in 2017, Nvidia made GPU chips for digital currency miners. The demand for chips skyrocketed, and the company went into overdrive, upscaling its production, thereby over-shipping.
The Albatross of Unsold Inventory
However, the good times wouldn’t last for long as the crypto bubble burst, the price of virtual currency plummeted, and the demand for GPU chips sank. Several miners cut their losses but went out of business in no time. The decline affected the company adversely, in that there was a large number of unsold inventories which the company is still currently struggling to sell.
With the virtual currency price descent, Nvidia’s stock took a blow, descending to $127 per share. Towards the end of the fourth quarter, the chip manufacturer had to cut revenue forecasts.
Huang, however, stated that the company’s unsold inventory would be disposed of in April 2019. The CEO also expressed optimism in delivery, saying recovery is underway and it would soon be business as usual.
Chipmakers Pivot away from Cryptocurrency Mining
Nvidia isn’t the only chipmaker to bow out of the cryptocurrency mining scene given the year-long bear market experienced in 2018. Like Nvidia, other companies like Taiwan-based Gigabyte Technology Ltd. began to upscale their cryptocurrency mining chip manufacturing in the hopes of making huge profits from the virtual currency boom.
As reported by BTCManager, Japanese IT behemoth GMO quit selling cryptocurrency mining hardware back in December 2018. Firms like Canaan Creative and Bitmain even went a step further, with plans to launch massive initial public offerings (IPOs).
Half a year later, both plans have fizzled away with regulators not convinced of their respective business models.