Nvidia share price falls heavily as cryptocurrency mining market shrinks

The end of the cryptocurrency mining boom is hurting Nvidia, and its share price is taking the hit.

Just under a year ago, with the price of a Bitcoin edging closer to $20,000, understandably there was a rush of fresh interest in cryptocurrency mining. Companies that sold performance technology products that could help mine coins faster – Nvidia and AMD, for instance – were enjoying the fruits of that. Their high end graphics boards were being snapped up fast, in turn leading to an increase in the price of said products.

But it’d be fair to say that those companies are on the downward slope when it comes to cryptocurrency now. Earlier this year, as the price of crypto fell back to a more natural level, so the interest in mining began to wane. Add in the fact that environmental concerns over crypto mining were being loudly raised, and the market looked like it had topped out.

Now, announcing its latest earnings ten days ago, Nvidia seems to have proven that.

Its quarterly results on the surface look decent. Revenue came in at $3.18bn, with earnings of $1.84 a share. Both of these numbers were slightly down on expectations, and Nvidia had braced investors for what was coming. However, Nvidia is now projecting that its fourth quarter numbers will be between $2.65bn and $2.75bn. And that’s some way down from the original estimate of $3.4bn.

UPDATE: We now see that Nvidia’s share price has been hit hard as a consequence of the cryptocurrency mining fall. That the company has found itself with excess stock of high end graphics products, that’s going to lead to their price falling (and, in turn, profits tumbling too). Its share price at the time of writing has fallen to $145, down from $202 just under two weeks ago.

As CEO Jensen Huang conceded in announcing the numbers, “our near-term results reflect excess channel inventory post the crypto-currency boom, which will be corrected”. Expect some decent deals on graphics cards coming soon, then.

The company is having successes in other areas of its business, and these numbers are the price it has to pay for the end of a boom. But that didn’t stop Nvidia’s share price tumbling as a consequence.