Satellites whiz across the globe, storage racks move by themselves, dog-like robots stand on their hind legs. The tech world around us comes alive in the video used by tech maker Nvidia to promote its in-house conference. Company boss Jensen Huang, as always in a leather jacket, is having a relaxed chat with his animated miniature counterpart. Experts suspect that the graphics card manufacturer will present the new RTX 4000 series in the next few days, with which technical development will take the next leap. However, Nvidia’s big show comes at an inopportune time, at least from the company’s perspective. Because the madness is over.
In the past few months, an unprecedented boom has come to an end, driving computer gamers crazy and allowing Nvidia to catch up with the top tech league thanks to gigantic sales. For a while, graphics cards from the Santa Clara, California-based company and its competitors were virtually unavailable. The demand just couldn’t be met.
On the one hand, this was due to the fact that people gambled to an unimagined extent during the pandemic, and on the other hand to the semiconductor crisis – chip production in Asia could not keep up. So far, so global crisis. What also made the graphics cards scarce was a special misappropriation. Because so-called miners, who “mine” cryptocurrencies on their computers, bought the market short. Graphics cards in computers are actually used to display visually demanding computer games and keep them running smoothly. But the purely digital cryptocurrencies depended on the cards for an additional benefit that they were never intended for. The virtual “minting” of cryptocurrencies mostly happened by computers solving complex mathematical puzzles. These puzzles can be solved particularly well with graphics cards because they have many computing cores working in parallel.
The players felt ripped off
The situation escalated in 2021: what was still available on Ebay and other platforms sometimes cost three times the list price. An additional annoyance for gamers were “scalpers”: those black market dealers who use bots – small software programs – to automatically buy as many copies as possible when a new card is launched. Then they list them on Ebay at high markups. The players got the feeling of becoming victims of usury. The miners were willing to pay the high prices – after all, they were speculating on the astronomical profits that cryptocurrencies promised until the market collapsed in the spring.
Some gamers got angry at Nvidia: The company aggravated the situation with its move to the crypto market. Because Nvidia also offers models designed for crypto mining – which are useless for gamers due to the lack of appropriate screen connections.
That went well for a long time. The gross margin increased to a fantastic 65 percent. The stock became a big winner in the boom during the pandemic. The market value moved towards a trillion dollars, where the sphere of Microsoft, Amazon, Apple, Alphabet and Meta begins.
Now things look different. The share price has more than halved in a few months. The quarterly figures in August show how the market has cooled: The gaming division collapsed by 44 percent compared to the previous quarter. The fact that the company cited “macroeconomic headwind” as the reason made some observers smile. They accuse Nvidia of not admitting that the end of the crypto boom hit them and that they bet on the wrong market.
Exact figures on the share of mining in the collapse are missing, but the collapse in sales coincides with the implosion of many cryptocurrencies. Last week, the second most important crypto system after Bitcoin, Ethereum, also carried out a fundamental reorientation: It now dispenses with verifying transactions with complex calculations and instead uses a less power-consuming process. The operators want to get rid of their reputation as climate killers. The probably millions of graphics cards of the Ethereum miners have suddenly become useless for them. Now offers are flooding the internet, prices have fallen by several hundred dollars. The tenor in gamer forums: I can finally afford a graphics card again.
There was also a public exposure at the weekend. The Californian manufacturer EVGA, a partner for two decades, announced, to no longer install Nvidia graphics chips in its cards. You feel arrogantly treated by the top dog, who also competes with you with his cheap house brand. In a brief statement, Nvidia only praised the good cooperation and wished EVGA good luck.
The gamers now only have one problem that has already ruined the balance sheet for the cryptominers: expensive electricity. In order to use the graphics cards smoothly with the latest games, they must be cooled so as not to overheat. That eats up energy. On Twitter, a user dismissed Nvidia’s upcoming premium card: “You can only use the 4090 if your father has a nuclear power plant.”