Nvidia says ‘crypto adds nothing useful to society’ after billions in mining sales
Nvidia’s Chief Technology Officer, Michael Kagan, has expressed a negative view on cryptocurrencies, stating that they do not “bring anything useful for society,” whereas “AI does.”
Crypto isn’t ‘useful for society’
According to Kagan, AI applications such as the chatbot ChatGPT have more value than mining crypto. Kagan’s comments are not too surprising given that Nvidia has a history of distancing itself from the crypto community, such as limiting the ability of its graphics cards to mine Ethereum in 2021.
Kagan doubled down on his anti-crypto stance, stating that he has never believed in blockchain technology.
“I never believed that [crypto] is something that will do something good for humanity.”
Nvidia’s recent crypto past
However, Nvidia’s success in the stock market over the past two years does seem to have a correlation to the crypto industry. In 2021, prior to The Merge, Nvidia released a graphics chip (CMP) that was optimized for Ethereum mining while limiting gaming-focused graphics cards. However, the chips failed to impress as sales were ‘nominal’ and collapsed 77% in the third quarter of 2022.
In addition, Nvidia was fined $5.5 million in May 2022 by the SEC for failing to disclose the number of GPUs sold for mining. The SEC alleged that Nvidia knew the cards were being used for mining but failed to reveal the information, which, they said, misled investors regarding the growth of the business. Given that the majority of Nvidia cards were used to mine Ethereum, which moved to proof-of-stake at the end of 2022, it is a fair criticism as demand for cards dissipated post-Merge.
Leading up to the Ethereum Merge, which took place on Sept. 15, 2022, revenue for Nvidia gaming GPUs (which mostly still worked for crypto mining following community workarounds) fell to $1.57 billion, down from $3.2 billion the year prior. Thus, as demand for Ethereum miners fell, so did Nvidia’s sales. In fact, if you look at the Nvidia share price relative to the price of Ethereum, both reached all-time highs within a week of each other before declining significantly.
Interestingly, Nvidia’s CEO, Jensen Huang, also said back in 2017 that “cryptocurrency and blockchain are here to stay. The market need for it is going to grow, and over time it will become quite large.”
It appears that now Ethereum has moved to proof-of-stake, and its CMP chips failed to take off; the company has all but completely turned its back on crypto, in line with Kagan’s statements. The company’s focus is on AI research and gaming, with major clients like Microsoft, Amazon, and Oracle purchasing over 36,000 of Nvidia’s AI-focused processors.