2018-12-23 20:58 |
GPU Producer Nvidia Becomes The Worst Performer In S&P 500 Amid Bear Market
The cryptocurrency bear market has affected several companies and virtual currencies in the space. Many Initial Coin Offerings (ICOs) that gathered several millions of dollars were not able to launch a working product to the market. But the crypto mining industry has also been affected by this bear trend.
Cryptocurrency mining became a very attractive activity for individuals and companies that were searching to make an extra income. During the bull run experienced in 2017, mining activities were very attractive. Virtual currencies were reaching their all-time highs and the network difficulty in many of these major virtual currencies allowed companies to have an interesting revenue from mining activities.
Among the companies benefited by this bull market, we found those that produce GPU devices such as Nvidia and AMD. They were selling almost ever single GPU device they had and registered interesting profits. However, the bear market has affected them severely.
During the last quarter of the current year, Nvidia experienced a massive sell-off of its shares. Indeed, it became the worst performer in the S&P 500, according to CNBC. Starting in 2016, Nvidia’s market value increased from $14 billion up to $175 billion, that represents an increase of 1150% in just a few years.
Back in May, the firm was able to report the profits it had from the crypto mining activities. However, they forecasted two-third drop in sales in the second quarter. During the last quarter, the sales for mining activities completely fell to almost nothing. Jensen Huang, the CEO of Nvidia, said that these results show that there was an excess channel inventory after the crypto boom.
It seems that the prices of GPU cards grew exponentially during the bull market experienced by virtual currencies. However, once the market crashed, GPU did not reduce their price as fast as required for individuals to keep purchasing these GPU miners.
According to the PHLX Semiconductor Index, tracking the largest hardware producers in the market shows that they have lost around 20% during the last three months. Nvidia has already lost almost 50% in the last three months.
It is also possible to see that Bitcoin’s hash rate during the last months has also dropped substantially, close to 50%. This shows that Bitcoin’s price drop did not allow miners to cover their costs, forcing them to shut down their operations and enter in a later moment. After this drop on Bitcoin’s hash rate, the network difficulty has also been reduced allowing miners to re-enter the space.
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