This week, Nvidia announced its fiscal first quarter financial results, and not surprising to anyone who couldn’t track down an Nvidia GPU for several months at retail price, they were pretty good.
The company’s first quarter revenues surpassed $3.2 billion, which is 10% up from last quarter, and a whopping 66% up from last year. Profits were even more impressive, up 11% from last quarter, and 145% from last year.
The reason for the great quarter is obvious: the huge demand for GPUs created by the surge of interest in cryptocurrency mining. Miners caused the price of all high-end GPUs to nearly double at retail in the last year, something that angered the computer giant’s traditional target audience: gamers.
“Cryptocurrency demand was again stronger than expected, but we were able to fulfill most of it with crypto-specific GPUs, which are included in our OEM business at $289 million,” said Nvidia CFO Colette Kress in Thursday’s earnings call. “As a result, we could protect the vast majority of our limited GPU supply for use by gamers.”
Nvidia’s main rival, AMD, also announced growing profits last quarter, again due to cryptocurrency miners.
Whether people bought cards for mining, gaming, or just putting together a family work station, miners caused the price of all cards to rise, boosting profits for all targets.
Unfortunately, miners are a double edged sword for the graphics card makers. As the cryptocurrency market began to decline from its record high, mining has become less profitable, and sales have slowed to 30% of last quarter.
A worst-case scenario for graphic card makers is if prices continue to fall further, or stay stagnant for so long that the general public puts Bitcoin and cryptocurrency back on the back burner. If that were to happen, not only will the demand for mining decline, but many hobby miners will start selling high-end GPUs themselves, reducing sales of brand new, and more expensive than ever, graphic cards.
