Crypto-miners have become the bane of graphics processor-card companies. Both AMD and NVIDIA have complained about miners who buy their cards in bulk, resulting in retail shortages. When they ramp up manufacturing, they dump those cards back on the secondary market, resulting in massive inventory problems.
Well, NVIDIA finally had enough, but they realized that just making it more difficult for miners to buy cards wouldn’t work because those miners would find workarounds and likely trash NVIDIA in the process.
No, what they did is create a line of cards specifically for miners and then limited mining capabilities to their regular graphics cards, so they wouldn’t work as well. Let’s talk about why this not only is initially brilliant but could evolve into something far more interesting over the next couple of years.
The fast-growing crypto, currently Ethereum, has been the problem, because it explicitly favors graphics processing units (GPUs) for crypto mining. Oh, and if you don’t know what crypto mining is, it is how crypto currencies like Bitcoin and Etherium are created. You run a computer and use some incredibly complex math, mints cryptocurrency that you can spend. The effort uses a ton of power, and you need to keep updating your hardware to make sure you don’t spend more on electricity than you get in currency.
Be aware this process tends to exist in the early days of a cryptocurrency, and Ethereum is expected to move to something called a “proof-of-stage model with Casper Protocol” (who comes up with these names?) shortly. Venture Beat, back in 2018, did an excellent job of pointing out what you need to know if you want to mine cryptocurrency.
But, until it does, miners are screwing up the GPU market.
Embracing miners while protecting GPU sales
So what NVIDIA did, which is fascinating, is create a line of cards called CMP products, which don’t do graphics but are optimized for crypto-mining. These cards lack display outputs, so they don’t generate as much heat, they have lower peak core voltages and frequency, which should provide better coin yields at lower power, and they are tailored explicitly for mining.
Simultaneously, to remove the incentive to buy NVIDIA gaming GPUs instead, they lowered the hash rate on their GPUs, making them inefficient mining solutions. Mining cryptocurrency is all about making sure the currency you get exceeds the cost of mining it. By the way, a lot of people have lost a ton of money crypto-mining or just playing around with cryptocurrency. For instance, Tesla just lost 22% of its value due to a foolish cryptocurrency bet by Elon Musk, who continues to ping pong from being that company’s greatest asset to being its most significant liability.
This sequence of events all points out that messing with cryptocurrency isn’t for the faint of heart or the unskilled, and NVIDIA was wise to create a unique line that isolates miners from their mainstream GPU revenue sources. It also stops NVIDIA from subsidizing these efforts. Because, in effect, when the GPUs no longer served in crypto-mining, they were resold, cutting into NVIDIA’s revenue and making them an unwilling funding partner to this activity.
When they age out, the new CMP cards won’t have any value, so NVIDIA won’t have their revenue streams hurt by mining cards’ resale. This practice assures their sustaining market of gamers is protected from the incremental and soon decline market of crypto-miners.
NVIDIA and AMD had a massive problem with crypto-miners buying GPUs, resulting in spot shortages and then dumping the cards into the market resulting in inventory overruns. This problem wasn’t sustainable. So NVIDIA came up with a creative solution of crippling their GPUs for mining and then offering a more efficient solution for crypto-miners that wouldn’t cause them either the initial product shortage problem or the later excess inventory problem.
On paper, this solution is better both for NVIDIA gamers and the miners, but it is a new solution, and we still have to see if the market accepts it. Still, NVIDIA should be congratulated for coming up with a creative solution to what undoubtedly was an annoying problem.
Rob Enderle is a principal at Enderle Group. He is a nationally recognized analyst and a longtime contributor to eWEEK and Pund-IT. Enderle is considered one of the top 10 IT analysts in the world by Apollo Research, which evaluated 3,960 technology analysts and their individual press coverage metrics.