has raked in hundreds of millions of dollars by selling its chips to cryptocurrency miners, but its exposure to that market is hurting stocks after Bitcoin and Ethereum fell more than 3% in 24 hours.
Nvidia stock (ticker: NVDA) fell 2.5% to $183.24 on Tuesday, after investors received shares in a four-for-one stock split following Monday’s close. Shares may have seemed to fall a little faster early in the day, before adjusting the market data to account for the split.
The stock is up 74% in the past year, while the PHLX Semiconductor Index, or Sox, is up 51%.
The company’s most recent exposure to cryptocurrencies dates back to last year, when miners discovered that its Ampere-based graphics chips were good at producing Ethereum. The chips were so popular among miners — video game players can use one or two, while miners use many, many more — that Nvidia designed a version of the semiconductors specifically designed for mining. It suppressed the mining functions of the video game cards.
In its fiscal first quarter, which ended in April, Nvidia sold $155 million of its crypto chips, according to chief financial officer Colette Kress. Management expects crypto revenue of $400 million for the second quarter.
Kress’ numbers don’t include the video game graphics chips miners buy — some used by gamers can also be used for mining. BMO Capital Markets analyst Ambrish Srivastava estimated total cryptocurrency revenue in the first quarter to be about $650 million.
Bitcoin’s drop below $30,000 on Monday, and especially the drop in Ethereum, may have spooked investors who bet high cryptocurrency prices will continue to boost Nvidia’s chip sales. At noon on Tuesday, Ethereum was trading at $1,755.86, but last year, when the price was between $300 and $400, RBC Capital Markets analyst Mitch Steves estimated that one of Nvidia’s RTX 3080 card miners would be mining about $3 a day. yield, and took 233 days to reach profitability.
Last year’s strong interest in the Ampere chip line isn’t the first time Nvidia has had major exposure to the volatile cryptocurrency market. In 2018, the graphics processors were also popular with miners.
Towards the end of that year, a slump in Bitcoin and other crypto prices caused miners to try to offload their hardware, sparking a flood of cheap, used Nvidia graphics cards. Nvidia’s sales slumped, with sales dropping a whopping 31% for four consecutive quarters.
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