Nvidia revenues are small with crypto, maybe 5% at most and they do not get increased margins, that is the merchants.
However, the real concern, the legitimate concern, what about the used GPU market. Well here is the answer:
24/7 mining puts a serious strain on the graphics card components, so after a year or so of constant use a lot of the cards will start to fail. Fans wear out, VRMs fail, and RMAs (if you can get them) take weeks to complete. The point is to make money, not just break even, so if you start replacing cards after a year then you may not realize much of a profit—particularly after power costs and other expenses come into play.
Combine the above and buying used graphics cards starts to look like a gamble.
ure, there will be some deals, some GPUs still fit, but would you take that risk except at a very significant discount, if at all?
And this assumes that GPUs will not still be used for mining or other purposes like gaming, as many miners are also gamers (albeit not the organized businesses).
Nvidia is likely to bring balance to the force with a new gaming architecture in the later half of this year. Just as the theoretical flood of crypto cards hit the market.
The bear thesis for crypto seems to believe that NVDA is not a company that knows its customer and makes products that the customer wants, really bad. Gamers take great pride in their equipment. They have GEForce stickers on their snow board helmets.
At GTC Nvidia introduced the Quadro GV-100 Pro visualization GPU on Volta architecture. This features full RTX support. Game developers are chomping at the bit for this tech. This means they will create games using Real Time Ray Ray Tracing Cinematic graphics. Thus Nvidia knows they are creating a need. Consumer GPU cards to match. The chicken lays an egg and along will comes Nvidia with the frying pan.
Combine the above and buying used graphics cards starts to look like a gamble.
That is a good point, Tinker, one that I hadn’t thought of.
I have no idea what a graphic card fan sounds like after a year of running at top speed 24/7. Probably not so good.
That isn’t necessary for crypto-mining, but some people will no doubt do it like that.
From a quick scan of online comments, it seems that cards with reasonable cooling and fan speed limited at 80% or so will generally last for years in a mining operation.
There are a lot of claims that cards would wear out quickly, but few who recount practical experience in that regard.
The bottom line from the accounts about actual practical results seems to be that the vast majority of cards will run without problems for years.
Still, if a deluge of used cards hits the market, there will be PLENTY of stories about bad cards (even if they really concern only a relatively small percentage of all sales) which will depress prices on the secondary market.
I also expect video card companies to be unusually recalcitrant with regard to RMAs.
However, I’m not sure if the fact that prices for used cards will be depressed will do much to benefit NVDA, assuming that the large majority of the cards are still, in fact, useable.
If crypto currencies drop sufficiently to make mining sustainably unprofitable in the US and other countries, then those extra cards WILL be sold, and they WILL be reused (mostly for gaming), regardless of how low the price goes. And each such sale will lower NVDA’s sales, though not on a 1-1 basis.
A lot of the impact depends on the timing. If BTC drops to the point where mining is barely profitable and oscillates there for a year, then the impact from used cards will likely be modest.
If BTC suddenly drops to >1000 within the next month or two, with no prospect for recovery (i.e. due to EU regulatory action on money-laundering), then things will probably be different.
There’s an argument that a GPU used for mining could actually be safer to buy than one used for gaming. Miners are playing for max efficiency, and usually that is not running the GPU at its max with diminishing returns of the increasing power consumption. They also tend to put them in cooler environments to minimize cooling costs. The mean time before failure for most fans (stand alone ones, anyway) is in the tens of thousands of hours. So most fans will not fail before the GPU is obsolete (especially the way NVDA is advancing tech).
On the other hand gamers are the ones looking to push the limits and maximize frame rate usually with no regard to energy cost or fan noise so they might even overclock the GPU.
That said you just don’t know whether a used GPU was used gently or pushed to it’s extremes. For many maybe it doesn’t matter but unless the used price is a lot lower than retail I personally would not buy a used one if only for the warranty purposes, especially these high end (for gaming) cards where it would be a significant investment relatively speaking. I really don’t think the secondary market will get a material impact on the bottom line given that gaming is a diminishing proportion of NVDA revenues anyway. Maybe it’s a few percentage points of growth, if crypto falls totally out of favor.