Late Thursday, Nvidia announced that they believe there will be a sharp drop in video cards being purchased for crypto mining. Big news considering Nvidia said its sales jump of 150% year to year was mostly do to demand from miners buying video cards, much to the dismay of gamers who found cards being priced well above retail.
After the news, it created selling pressure on much of the crypto market, with Bitcoin currently down and trading at $8960 at the time of this article being published.
However, I believe the sentiment being shared by the market is a slight overreaction. I believe Nvidia in their prediction about cards being used less for crypto mining. Their specialty is video cards so you have no choice but to accept their forecast for their own business, especially if it happens to be negative. But I believe this says more about mining than it does about crypto popularity or price action.
What this news from Nvidia tells me is that mining has probably reached “peak decentralization” which is probably not the best news for those who believe in decentralization as the key tenet of crypto. However, this doesn’t really reflect on adoption or the price action of crypto. And it definitely doesn’t really reflect on large institutional money planning on entering the crypto space.
So in the end, this really shows how far crypto has come already. Mining is becoming less profitable for the average person. And while this is negative news for increased decentralization, at least in the short term, it is actually a good sign for crypto. It means that crypto has moved on and matured as a sector enough that the “hobbyist” miner is starting to get phased out. This is a natural step for any sector that is maturing. The barrier for entry always goes up over time.
So as I said, the Nvidia announcement is bad news in the short term for decentralization purists. But overall it’s a sign that crypto is maturing.