The American chip development company Nvidia attests to its drop in shares due to declining sales of CMP (Cryptocurrency Mining Process). The company stated that its 52% decrease for its first quarter of investments in “OAM and others” was due to the decline in CMP sales. Nvidia had this to say, as explained in a presentation on Wednesday.
In 2021, Nvidia recorded $24 million in chargebacks from its CMP sources; this too saw a disappointing 77% year-over-year decline.
In January of last year, the corporation introduced the CMP product to discourage cryptocurrency miners from stockpiling existing mining devices like Ethereum’s famous GeForce RTX 3080 Ti.
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While the chipmaker didn’t explain the exact amount of sales its CMP sales provided, it did label the value as “nominal” and more than $155 million in losses from the prior year.
Nvidia shares fall at the end of the first quarter
The company experienced strong quarterly growth from the last quarter of 2021 to the first quarter of 2022, increasing 8% in profitability. Thus, making up to $8.98 billion. Its shares also rose 3% to $1.36 a share. Additionally, the chipmaker stated that it would continue its buyback program until the end of 2023, and it is worth $15 billion.
Nvidia and the Q2
Nvidia has now been seeing a steady decline in interest in CMP mining chips during this second quarter. The reasons why this is so is probably due to Ethereum’s migration to the proof-of-stake mechanism. The current bear market, or recently implemented products from the industry leader: Intel Corporation. We do not know, but we do know that the technology giant is not going through a good time in its current billing.
The second quarter is not starting as interesting as the first quarter, with experts projecting a 4% loss to $8 billion in revenue. During after-hours trading on Thursday, shares of Nvidia (NVDA) were down 7% at $157.8. Additionally, NVDA shares have seen a nearly 50% decline year over year, reflecting a poor outlook for tech stocks.
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During the second quarter of last year, Nvidia was met with a 33% drop in expected returns, reaching $266 million, then $106 million in the third quarter and $24 million in the fourth quarter. That value has still fallen. The chipmaker revised its expectations for the second quarter (Q2), summarizing them at $8.1 billion due to the war between Russia and Ukraine and Lockdown in China.
Nvidia CMP and cryptocurrency mining
CMPs located in Nvidia’s Santa Clara can be effective in mining Bitcoin, Ether, and other digital assets using the Proof-of-Work consensus mechanism. Also, the token’s graphics card, built for gaming, can be effective for mining cryptocurrencies, unless restricted.
One notable fact is that CMPs are in very short supply. Even in secondary markets, they are rare to find. Thus, making the chances of sales smaller and smaller.
Featured image from Pixabay, chart from TradingView.com