During NVIDIA’s Q4 earnings call, the company CEO and CFO answered multiple questions from analysts, with a few of them pertaining to cryptocurrency and the impact of the present mining bubble on the Q4 revenue. The first interesting bit came from Collete Kress, the NVIDIA CFO who reported that in the last quarter of 2020, mining only contributed $100 to $300 million to the company’s gaming revenue. That’s just over 10% of the total Q4 revenue.
Analyst estimates suggest that cryptomining contributed 100 million to 300 million to our Q4 revenue. That is a relatively small portion of our gaming revenue in Q4. Cryptocurrencies have recently started to be accepted by companies and financial institutions and show increased signs of staying power to address – to address industrial Ethereum mining demand, last week we announced a new line of NVIDIA CMPs or crypto mining processors. Shipments will start in March. CMPs lack display outputs and have other optimizations that improve crypto mining power efficiency. CMP products will let us gain some visibility into the contribution of crypto mining to our overall revenue.Collette Kress, NVIDIA CFO
Acknowledging the increasing demand from miners, Kress brought up the re-introduction of the CMP mining processors. Out of the four cards announced, three are based on the older Turing microarchitecture while the top-end 90X is expected to be based on defective GA102 dies.
|Architecture||Turing (TU116)||Turing (TU106)||Turing (TU104?)||Ampere (GA102?)|
|Ethereum Hash Rate(1)||26 MH/s||36 MH/s||45 MH/s||86 MH/s|
|Rated Power(2)||125 W||185 W||250 W||320 W|
|Power Connectors(2)||1x 8-pin||1x 8-pin||2x 8-pin||2x 8-pin|
For Q1, we estimate that CMP will contribute approximately 15 million. We plan to sell these products to industrial miners. We will quantify their contribution each quarter for transparency.Collette Kress, NVIDIA CFO
The NVIDIA CFO expects miners to contribute approximately 15 million to the company’s Q1 2021 revenue, via the sales of the new CMP parts. This excludes the revenue added by the sale of GeForce cards to miners and considering that most of the quarter will have ended by the time the CMP line launches, it’d be fair to say that the RTX 30 series will another 200-300 million (if not more) to NVIDIA’s Q1 revenue.
Most people thought that the – once the mining – the GPUs come back into the aftermarket, a small part does that, some people do that, but the vast majority don’t keep them. And the reason for that is because obviously they believe in Ethereum and so – they’re industrial miners that’s what they do. And so, they’re keeping around for when the profitability returns and they could kick start the mining gear. We saw – that’s what we saw in the latter part of last year. We saw the hash rates starting to grow.Jensen Huang, NVIDIA CEO
The other statement worth paying attention to came from the NVIDIA CEO, Jensen Huang, himself. Indirectly reacting to Linus’ video titled, “NVIDIA pretends to care about gamers”, he explained that the vast majority of miners (industrial ones) don’t sell their graphics cards and other mining gear, and instead hold onto it in anticipation for the next mining boom.
Linus had alleged that most of the CMP mining cards will be discarded after the mining bubble ends, eventually ending in a landfill, rather than the 2nd hand market. If, however, miners held on to their gear, then how do you explain the year-long mining hangover that was a central theme of multiple earnings calls after the last cryptomining boom ended?
Most of that was result of the installed miners reactivating their equipment. It wasn’t until earlier this year that we started to see a demand in our own GPUs. And when that starts to happen, there are some different dynamics. There’s – the primary source these days come from powerful ASICs. And then there’s some that that comes from our GPU and other GPUs in the marketplace. And so, I think that this is going to be a part of our business. It won’t grow extremely large, no matter what happens. And the reason for that is because when it starts to grow large more ASICs comes into market, which kind of needs it. And when the market becomes smaller, it’s harder for ASICs to sustain the R&D.Jensen Huang, NVIDIA CEO
Regardless, the NVIDIA CEO went on to say that demand from miners only spiked earlier this year, rather than late 2020. Jensen explained that the primary source of mining hardware are ASICs while NVIDIA (and AMD) only supply a small portion of hardware to miners.
The GeForce RTX 30 Series GPUs have kicked off a powerful upgrade cycle and we estimate only around 15% of GeForce gamers on an RTX cost GPU, which is needed to experience the beautiful rate trace graphics of modern games. Moreover, the universe of gamers is rapidly expanding and the reach of GeForce has extended beyond gamers to some 45 million creators.Collette Kress, NVIDIA CFO
The last bit that I’d like to talk about is with respect to the percentage of gamers using RTX GPUs. According to the NVIDIA CFO, Collette Kress, only around 15% of GeForce gamers are presently using an RTX GPU. During the same call, Jensen (during the question-answer session) claimed that around 50% of the install base has upgraded to an RTX GPU. Those are two very different figures from the CFO and CEO of NVIDIA.
There are some 200 million install base in desktops and 50 million in laptop. And the vast majority of them, we’ve only upgraded approximately I think it’s something like 50% of the install base has been upgraded to RTX. And so there is a giant install base and the install base is growing that we need to upgrade to the next generation of computer graphics.Jensen Huang, NVIDIA CEO
This could simply be an error (15% instead of 50% for the latter), I can’t say for sure, but it’s still worth pointing out.