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NVIDIA: Stock of the Week

Why crypto and graphics cards are breaking up – and they’re both better for it.

Andrew Willis 12 September, 2022 | 4:48AM
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Andrew Willis: Bitcoin and other cryptocurrencies have been calling it quits with graphics cards for mining purposes and we’re likely seeing the fallout from the break-up in Nvidia stock (NVDA). But the relationship was never meant to be.

Why Nvidia Stock and Crypto are Breaking Up

First of all, much of the ongoing split between crypto and Nvidia’s GPUs has been blamed on the fall of bitcoin prices to multi-year lows. But that’s not entirely the case. The truth is, they’re kind of bad for each other, with graphics cards inefficient compared to increasingly used purpose-built mining hardware, buyers pricing out gamers, and crypto getting a bad rap for the wasted electricity.

If there weren’t enough headwinds for GPU crypto miners already, they still have to contend with the increase in mining difficulty affecting both Bitcoin and Ethereum networks. It also makes you wonder: if difficulty increases with the power of miners, and difficulty is high today, how much has crypto already moved onto specialized hardware?

Why Nvidia Stock has Slowed Down

Nvidia’s second-quarter results provide some clues about GPU demand, with its gaming segment down 44% over the last quarter and 33% over the last year. Sector strategist Abhinav Davuluri had been anticipating a slowdown, with a crash in crypto prices contributing to the decline that may continue for a few more quarters.

Investors instead might want to keep an eye on Nvidia’s data centre business, which appears to be a match made in heaven as sales are up 61% year over year. There’s also a potentially lucrative role in self-driving vehicles and the metaverse, and there could just be a return to graphics cards for gaming.

For Morningstar, I’m Andrew Willis.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
NVIDIA Corp124.13 USD1.51Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar.ca. He previously produced content for Fidelity Investments and finance events for Euromoney Institutional Investor and has written in the past for Thomson Reuters and CNN. Follow him on Twitter @AndrewWillisCDN.

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