Global computer graphics cards and chipmaker NVIDIA’s investors and analysts were in for a pleasant surprise on Thursday with the company reporting a 34% on-year jump in its fiscal fourth quarter revenue, beating most street estimates, and sending the shares soaring over 10% in after hours. The reason: the company riding on the Bitcoin wave that has took the world by storm and has people across the globe scouring for the best hardware to mine the cryptocurrency.
NVIDIA reported an EPS of $1.78 on revenue of $2.91 billion for the October-December, far surpassing analyst expectations of $1.17 per share on $2.69 billion revenue. The demand for NVIDIA’s GPUs (graphics processing unit) related to mining cryptocurrencies had helped the revenue exceed expectations, the company CFO Colette Kress said. It “accounted for a higher percentage of revenue than the previous quarter.” she said.
So who’s driving all of this demand for graphics cards?
Cryptocurrency miners. Several people active in the mining of cryptocurrencies say that mining Ethereum and other such cryptocurrencies is becoming hugely profitable lately. It explains why more and more people are investing in extending their mining operations. Getting capable graphics cards is among the key requirements.
Mining crypto cash is an arms race that rewards early adopters. After the introduction of Bitcoin, the first decentralized cryptocurrency that premiered in early 2009, similar other digital currencies have made it to the market, including a spin-off from Bitcoin called Bitcoin Cash.
High-end graphics cards
The marketplace for high-end graphics cards used to work like every other marketplace for computer gears. One would go to the neighborhood electronics store, opt for one up from the shelf, and pay a price right around the manufacturer’s suggested retail price.
But the surge of cryptocurrency mining has generated an unparalleled global demand for graphics cards. Nowadays, anecdotal evidence shows that rather than selling at a discount, used graphics cards consistently sell for well above their list price on sites such as eBay and Craigslist.
The graphics cards are commanding a premium now because high-end cards are the easiest way to mine Ethereum and other cryptocurrencies. With the price tag on these cryptocurrencies growing to unprecedented levels — barring the recent fall — a robust graphics card can make several dollars every day for the cryptocurrency miner. Therefore an ever growing community of hobbyist miners has been snapping every graphics card it can get it hands on.