Here's What Nvidia Thinks About Cryptocurrency Mining

It is no secret that Nvidia (NASDAQ:NVDA) has emerged as one of Wall Street’s favorite stocks over the past two years. The graphics chip maker has exploded in value—and garnered significant investor attention—thanks to the continued growth of its core business and the emergence of several new businesses, and now it feels like Nvidia has its hands in nearly every corner of the modern technology world.

This Santa Clara, California-based processor manufacturer has been a top choice among PC gamers looking to build high-end machines for years, but now the company is a major player in many other exciting markets, including datacenters, self-driving cars, and cryptocurrency mining.

Interestingly enough, Nvidia’s rapid rise has come at the same time as a massive surge in the cryptocurrency market, so the fact that the company’s GPUs are often used in the coin mining process makes the whole story even more remarkable.

Led by huge gains from the likes of bitcoin and Ethereum, cryptocurrencies have become all the rage in the financial sector as proponents and critics debate the merits of these digital assets. Naturally, this has also led to increased interest in cryptocurrency mining, a process that sees users rewarded with new coins or tokens when they volunteer their own computing power for the necessary blockchain maintenance that makes these cryptos work.

Nvidia and competitors like AMD (NASDAQ:AMD) come into play here because their GPUs pack the punch needed to power the dedicated mining rigs that many are rushing to build. Nevertheless, Nvidia has been hesitant to consider cryptocurrencies a driving force behind its growth.

“While the overall contribution of cryptocurrency to our business remains difficult to quantify, we believe it was a higher percentage of revenue than the prior quarter,” said Nvidia CFO Colette Kress in the company’s latest earnings conference call. “That said, our main focus remains on our core gaming market, as cryptocurrency trends will likely remain volatile.”

Analysts in that conference call were clearly wanting to hear more about Nvidia’s perception of cryptocurrencies, but they were met with a bit of stonewalling from the company’s enigmatic CEO, Jensen Huang.

Fielding a question centered on whether his management team’s outlook on cryptos has been “modeled more conservatively,” Huang responded simply by saying, “We model crypto approximately flat.”

Of course, Nvidia’s balance sheet does not stonewall. We know that Nvidia witnessed total GPU revenues of $2.461 billion in its most recent quarter, up about 33% from the prior-year period.

A vast majority of that revenue is coming from the businesses that Nvidia actually markets its products toward, and we should not discount the strength of its gaming, datacenter, and professional visualization segments.

But as much as Nvidia management would like to shift the conversation away from cryptocurrencies, it is clear that coin miners are having some sort of impact on the company’s top line.

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