Gigabyte profits threatened as cryptocurrency mining slows

The falling price of cryptocurrencies is having a knock-on effect for cryptocurrency mining…

The falling price of Bitcoin in recent weeks looks like it’s had a knock-on effect for the cryptocurrency mining community as well. With tighter security and regulation around the crypto sector too, the price of currencies has faced a squeeze, after a stellar start to the year.

Already in recent weeks, we’ve had warnings about how dependent AMD’s graphical processing unit hardware business is on cryptocurrency miners. Now, though, a fresh warning has hit PC motherboard and graphics card manufacturer Gigabyte Technology.

Profits for Gigabyte are set to tumble for the second quarter of the year, with a fall in shipments of graphics cards in particular said to be to blame.

Analysts from Capital Investment Management Corp have now argued that “the prices of major cryptocurrencies have plunged after peaking in early 2018 … leading to persistently lower demand for cryptocurrency mining and for Gigabyte graphics card shipments, which decreased somewhat since the beginning of the second quarter”.

Furthermore, it argues that graphics cards’ average selling price are set to fall in the months ahead. Part of this is likely down to demand from PC videogamers. But cryptocurrency’s challenges are also a sizeable part of the fall.

In terms of Gigabyte’s bottom line, revenues fell from $8.5bn in March to $5bn in May. Shipments of graphics cards dropped from 450,000 in March to between 300,000 and 350,000 in May.

Whether a downturn in cryptocurrency mining is temporary or permanent remains to be seen. Likewise, how it’ll affect the revenues of the likes of AMD and Nvidia, other big players in the hardware market. We’ll keep you posted…