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Author Topic: Mining equipment sales expected to drop  (Read 121 times)
jaysabi
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May 16, 2018, 06:02:50 PM
 #1

Nvidia has announced that they expect sales of GPUs related to cryptocurrency mining to drop by about 67% in the current quarter. That's a pretty monstrous drop, and if mining investment is a leading indicator of overall market demand for crypto, it would follow that this decreased demand in mining equipment foretells decreased demand for crypto generally. If not a leading indicator, I think it has to be pretty tightly correlated with general crypto demand, so perhaps there's less investment in mining because there's less interest in crypto.  67% seems to be far too large to be a natural variance in buying patterns.  If this was unrelated variance, I would expect a drop to be no more than 10%, so a drop this large suggests interest may be on the decline. This would seem to coincide with the price weakening we've seen as Bitcoin has failed repeatedly to get back over $10,000. Every time it gets close, it suffers a fall back below $9,000. It's almost impossible to draw any long term conclusions about this, but it's an interesting piece of the puzzle.

Quote
Demand from cryptocurrency miners was stronger-than-expected in the first quarter and translated into revenue of $289 million, Nvidia said Thursday on its earnings conference call. Crypto sales will probably fall by about two-thirds in the current fiscal quarter, the company said.
https://www.bloomberg.com/news/articles/2018-05-10/nvidia-reveals-crypto-sales-for-first-time-and-predicts-big-drop


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ummart66
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May 16, 2018, 06:49:30 PM
 #2

As someone who's been thinking about mining but hasn't gotten in to it yet I see the decline in price mostly due to a decline in ROI of buying mining gear. On many boards that I look at there are a lot of people saying that it's just much better to buy crypto instead of paying for the mining equipment. Especially now there's a lot of uncertainty in the market, new people to the game may not be as excited to drop thousands into mining equipment right now just based on the predicted ROI of their investment at the current price of BTC. Even now mining is extremely interesting to me and I'm still contemplating buying mining components, but I just don't think it'd be the best investment at this time.

In December/January I remember reading tonnes of posts about people looking into start mining, just because at that current level the time it would take to pay off your initial investment seemed to be relatively short.

I still think there's interest in crypto, but to become a miner you need to be extra invested into it since it will take a while for your investment to pay off.

Either way, it's an interesting article. Never expected the interest in mining equipment to drop off that quick.

bobo012
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May 16, 2018, 07:29:05 PM
 #3

Mining profits are plunging and gpus have risen in price. That has led us to surplus of overpriced gpus. Nobody is willing to buy them with mining profits low. Another thing is quick coverage of algorithms with asics, we have an asic for everything now, and with second gen it will destroy gpu profits. We need more new asic resistant algorithms,

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May 16, 2018, 10:27:42 PM
 #4

waiting for the next bitcoin and GPU pump Smiley
Tapyaks72
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May 16, 2018, 10:39:39 PM
 #5

Mining profits are plunging and gpus have risen in price. That has led us to surplus of overpriced gpus. Nobody is willing to buy them with mining profits low. Another thing is quick coverage of algorithms with asics, we have an asic for everything now, and with second gen it will destroy gpu profits. We need more new asic resistant algorithms,
Yeah we cannot deny that  profit in mining is lower now somehow it affects the droppings down of mining equipment  price but in the other hand it is maybe the cause of low demand  due to high supply because there are of computer companies who ares willing to manufacture GPUs.

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May 16, 2018, 10:48:28 PM
 #6

Mining profits are plunging and gpus have risen in price. That has led us to surplus of overpriced gpus. Nobody is willing to buy them with mining profits low. Another thing is quick coverage of algorithms with asics, we have an asic for everything now, and with second gen it will destroy gpu profits. We need more new asic resistant algorithms,
Yeah we cannot deny that  profit in mining is lower now somehow it affects the droppings down of mining equipment  price but in the other hand it is maybe the cause of low demand  due to high supply because there are of computer companies who ares willing to manufacture GPUs.
You are right, maybe if the inventory decreases it will affect the price increase, I also agree with the GPU increase so the supply of coins especially allcoin is limited.
Hydrogen
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May 16, 2018, 11:25:28 PM
Merited by jaysabi (1)
 #7

Nvidia has announced that they expect sales of GPUs related to cryptocurrency mining to drop by about 67% in the current quarter. That's a pretty monstrous drop, and if mining investment is a leading indicator of overall market demand for crypto, it would follow that this decreased demand in mining equipment foretells decreased demand for crypto generally.

Nvidia's estimates could be inaccurate by a significant degree. Last month amazon was expected to post earnings of $1.24 per share. Their real earnings were $3.27 per share. There's a chance this could represent a new method of publishing anti crypto FUD and not have much relation to actual statistics.

Of course, there are other potential angles. Back in january 2018, it was reported a number of chinese bitcoin mining operations were forced to shut down:

Quote
China Quietly Orders Closing of Bitcoin Mining Operations

Move tightens a clampdown that already has shut exchanges for trading of cryptocurrencies in China

Chinese authorities ordered the closing of operations that create a large share of the world’s supply of bitcoin, tightening a clampdown that has already shuttered exchanges for the trading of cryptocurrencies in China.

A multiagency government task force overseeing risks in Internet finance issued a notice last week ordering local authorities to “guide” the shutdown of operations that produce, or “mine,” cryptocurrencies, according to the notice and people familiar with the information.

While the notice called for an “orderly exit” without setting a deadline, far-flung areas of China where cryptocurrency mining operations have flourished are complying. A local regulatory official in the far western region Xinjiang said Wednesday that his agency received the notice and is doing “what the country wants.”

https://www.wsj.com/articles/china-quietly-orders-closing-of-bitcoin-mining-operations-1515594021

China supposedly represents "78.9%" of all bitcoin mining. This type of across the board shutdown could have significant effects.

It is possible a deluge of crypto mining hardware is being dumped en masse as chinese mining operations fold. This could create a significant decrease in demand on increased supply, over the short term.

We know for certain the higher the price of bitcoin, the more lucrative and profitable it is to mine crypto. With the price of bitcoin rising near $10,000 mining operations become more profitable across the board. "A rising tide, lifts all ships." If the price of bitcoin rises above $10k demand for mining hardware should increase as the market becomes more profitable.

If chinese miners are dumping their hardware, resulting in overall lower hashrates, we could see a fall in mining difficulty which could also fuel demand for mining hardware.

Good topic OP. Hopefully we'll have some good replies in this thread. Would merit if I had any left to give.

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May 16, 2018, 11:30:00 PM
Merited by jaysabi (1)
 #8

It could very well be a cyclical trend.
The hype started earlier last year but then peaked in December/January.
With the peak in price came increased difficulty due to those hungry to mine, but as interest has dropped (along with the price) it'd seem that the demand for mining equipment has too.
I wouldn't say that this is cause for concern given that we don't know the exact figures and that its still (relatively) early to make any assumptions about the demand for mining GPU equipment especially given that Nvidia's acknowledgement of the initial rise in demand was also only recent.
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May 17, 2018, 03:51:30 PM
Merited by Hydrogen (1)
 #9

Nvidia has announced that they expect sales of GPUs related to cryptocurrency mining to drop by about 67% in the current quarter. That's a pretty monstrous drop, and if mining investment is a leading indicator of overall market demand for crypto, it would follow that this decreased demand in mining equipment foretells decreased demand for crypto generally.

Nvidia's estimates could be inaccurate by a significant degree. Last month amazon was expected to post earnings of $1.24 per share. Their real earnings were $3.27 per share. There's a chance this could represent a new method of publishing anti crypto FUD and not have much relation to actual statistics.


Of course, there are other potential angles. Back in january 2018, it was reported a number of chinese bitcoin mining operations were forced to shut down:

Quote
China Quietly Orders Closing of Bitcoin Mining Operations

Move tightens a clampdown that already has shut exchanges for trading of cryptocurrencies in China

Chinese authorities ordered the closing of operations that create a large share of the world’s supply of bitcoin, tightening a clampdown that has already shuttered exchanges for the trading of cryptocurrencies in China.

A multiagency government task force overseeing risks in Internet finance issued a notice last week ordering local authorities to “guide” the shutdown of operations that produce, or “mine,” cryptocurrencies, according to the notice and people familiar with the information.

While the notice called for an “orderly exit” without setting a deadline, far-flung areas of China where cryptocurrency mining operations have flourished are complying. A local regulatory official in the far western region Xinjiang said Wednesday that his agency received the notice and is doing “what the country wants.”

https://www.wsj.com/articles/china-quietly-orders-closing-of-bitcoin-mining-operations-1515594021

China supposedly represents "78.9%" of all bitcoin mining. This type of across the board shutdown could have significant effects.

It is possible a deluge of crypto mining hardware is being dumped en masse as chinese mining operations fold. This could create a significant decrease in demand on increased supply, over the short term.

We know for certain the higher the price of bitcoin, the more lucrative and profitable it is to mine crypto. With the price of bitcoin rising near $10,000 mining operations become more profitable across the board. "A rising tide, lifts all ships." If the price of bitcoin rises above $10k demand for mining hardware should increase as the market becomes more profitable.

If chinese miners are dumping their hardware, resulting in overall lower hashrates, we could see a fall in mining difficulty which could also fuel demand for mining hardware.

Good topic OP. Hopefully we'll have some good replies in this thread. Would merit if I had any left to give.

To the underlined bit: This is quite different. Wall Street analysts expected the company to post earnings of a certain amount, but the company generally has a much better idea. If Amazon had said it expected to earn $1.24 and then posted $3.27, that would be more on point, but also not perfect since so much more goes into computing earnings than sales, so there's more likelihood of variance. When a company projects sales for the next quarter, it's generally the best indication of what is going to happen since nobody knows their business better than they do. On top of that, Nvidia is not known to sandbag sales numbers (by comparison, Apple is notorious for under promising so they can over deliver in their quarterly reports), so Nvidia's projection of a 2/3 drop in cryptp-related sales should be taken seriously as there's really no better authority on what they're going to sell than they are themselves. Lastly, Nvidia is likely warning about a trend they've already identified. At the time of the quarterly call, the current quarter is half done, so they already have some pretty decent sales data and trends for the current quarter, so when they're saying they're projecting a 2/3 fall, it's probably because they're already seeing the significant drop playing out. It's less of a prediction than it is an extrapolation of what's already happened.

I suspect Nvidia is probably experiencing the effects of what is happening in China as you point out. The drop in investment in mining is likely due to the uncertainty of ever recouping cost if the government is shutting down mines.


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May 17, 2018, 04:14:05 PM
 #10

I mean, of course this is going to happen. When the price of all cryptos get a large haircut the profits of mining is going to decrease by a massive amount so this is going to lead to less and less people getting involved with crypto mining. When you think of it, it is dumb for people to leave due to this -- as they probably joined in when the price of btc was around 15k (all other coins were higher as well)

If people really do want to speculate and can hold their coins for sometime, then continue to mine now. They'll do fine out of the deal as well. Worst case they don't make as much money as they thought they would. Best case they sell their coins for a large amount in profit.


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May 17, 2018, 05:00:48 PM
 #11

I mean, of course this is going to happen. When the price of all cryptos get a large haircut the profits of mining is going to decrease by a massive amount so this is going to lead to less and less people getting involved with crypto mining. When you think of it, it is dumb for people to leave due to this -- as they probably joined in when the price of btc was around 15k (all other coins were higher as well)

If people really do want to speculate and can hold their coins for sometime, then continue to mine now. They'll do fine out of the deal as well. Worst case they don't make as much money as they thought they would. Best case they sell their coins for a large amount in profit.

Agreed. The problem is that most of those who jumped on board then had and still have no idea about bitcoin and the technology it represents.
Bitcoin became a buzzword and everyone jumped in hoping to get rich quick. I suppose those who purchased miners learnt more about it in order to lear the technicalities about mining. That being said, those who bought mining equipment are probably utilising it. Given the fall in demand and the fact that they have the equipment means mining is almost a no brainier. Considering that demand has fallen (which usually is matched by a fall in difficulty/profitability) without the hype there is less of a reason to need to update the equipment if the current ones are still working on a ROI.
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May 17, 2018, 05:05:18 PM
 #12

It isn't really much of a prediction but a straightforward inference from the decrease in the price of crypto. GPU mineable coins like ETH, Siacoin, Decred have all seen large drops in price. The buzz from new people who were willing to join simply isn't there. The inflated prices of GPU's and decreasing ROI must have made the new people lose interest pretty fast.

You can expect to see the prediction for a 2 times increase in GPU sales with the next bull run in crypto, if and when it comes.


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May 17, 2018, 10:58:39 PM
 #13

Recently, I saw a lot of used mining cards up for grabs at a very discounted price. It seems that the 2nd quarter of the year is the quietest and haardest times for miners and traders alike. On 2016 and 2017, general interest regarding crypto also declined on Q2, with some miners also selling their rigs and coming back alive on September which is the start of Q3. It might already be a pattern and the old adage might ring true: Sell in May and go away. For now, let's see whether nVidia's statistics would reflect what really is happening in the mining scene.

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May 17, 2018, 11:37:00 PM
 #14

To the underlined bit: This is quite different. Wall Street analysts expected the company to post earnings of a certain amount, but the company generally has a much better idea. If Amazon had said it expected to earn $1.24 and then posted $3.27, that would be more on point, but also not perfect since so much more goes into computing earnings than sales, so there's more likelihood of variance. When a company projects sales for the next quarter, it's generally the best indication of what is going to happen since nobody knows their business better than they do. On top of that, Nvidia is not known to sandbag sales numbers (by comparison, Apple is notorious for under promising so they can over deliver in their quarterly reports), so Nvidia's projection of a 2/3 drop in cryptp-related sales should be taken seriously as there's really no better authority on what they're going to sell than they are themselves. Lastly, Nvidia is likely warning about a trend they've already identified. At the time of the quarterly call, the current quarter is half done, so they already have some pretty decent sales data and trends for the current quarter, so when they're saying they're projecting a 2/3 fall, it's probably because they're already seeing the significant drop playing out. It's less of a prediction than it is an extrapolation of what's already happened.

I suspect Nvidia is probably experiencing the effects of what is happening in China as you point out. The drop in investment in mining is likely due to the uncertainty of ever recouping cost if the government is shutting down mines.

Bolded: you're definitely much more savvy than I am on those points.

I was thinking nvidia, samsung, russia and others poised to enter the ASIC hardware market could increase supply and reduce demand. Such could represent a chunk of nvidia's projections. I'm 100% clueless as to when proposed entry to market was supposed to occur, my timeframe there could be off by a significant margin. Perhaps we are witnessing a financial downside to the ASIC market transitioning from what many have labeled a centralized monopoly to a free market with reduced demand.

There has been so much media driven FUD against bitcoin over the past 2 years. Its becoming easy to assume anything negative said about crypto in has an origins story which can be traced back to a lame political agenda.

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May 21, 2018, 07:21:20 PM
 #15

To the underlined bit: This is quite different. Wall Street analysts expected the company to post earnings of a certain amount, but the company generally has a much better idea. If Amazon had said it expected to earn $1.24 and then posted $3.27, that would be more on point, but also not perfect since so much more goes into computing earnings than sales, so there's more likelihood of variance. When a company projects sales for the next quarter, it's generally the best indication of what is going to happen since nobody knows their business better than they do. On top of that, Nvidia is not known to sandbag sales numbers (by comparison, Apple is notorious for under promising so they can over deliver in their quarterly reports), so Nvidia's projection of a 2/3 drop in cryptp-related sales should be taken seriously as there's really no better authority on what they're going to sell than they are themselves. Lastly, Nvidia is likely warning about a trend they've already identified. At the time of the quarterly call, the current quarter is half done, so they already have some pretty decent sales data and trends for the current quarter, so when they're saying they're projecting a 2/3 fall, it's probably because they're already seeing the significant drop playing out. It's less of a prediction than it is an extrapolation of what's already happened.

I suspect Nvidia is probably experiencing the effects of what is happening in China as you point out. The drop in investment in mining is likely due to the uncertainty of ever recouping cost if the government is shutting down mines.

Bolded: you're definitely much more savvy than I am on those points.

I was thinking nvidia, samsung, russia and others poised to enter the ASIC hardware market could increase supply and reduce demand. Such could represent a chunk of nvidia's projections. I'm 100% clueless as to when proposed entry to market was supposed to occur, my timeframe there could be off by a significant margin. Perhaps we are witnessing a financial downside to the ASIC market transitioning from what many have labeled a centralized monopoly to a free market with reduced demand.

There has been so much media driven FUD against bitcoin over the past 2 years. Its becoming easy to assume anything negative said about crypto in has an origins story which can be traced back to a lame political agenda.

I do a lot of "traditional" investing (equities and such) and like reading about companies and how they make money, as opposed to what the stock is doing. Traders are more concerned with the stock, investors are more concerned with the company. The stock will eventually follow what the company does, if it falls out of whack occasionally due to traders. So my post about the projections and all that fell within my wheelhouse on this one due to my familiarity with how companies report information to investors.

As it applies to Nvidia, crypto has been big source of frustration to Nvidia's traditional customers, as miners have snapped up GPUs and caused shortages for gamers and other customers who want to buy GPUs for non-mining reasons. I'm not sure if Nvidia has really chased the crypto market though, I think it's much more a case of they make powerful GPUs for computers and gamers, and it happens to have utility in crypto mining. The drop in sales is definitely demand side though, not supply side.


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May 21, 2018, 07:31:31 PM
 #16

I remember that I've read somewhere that at the previous year they they had income equal to the previous year revenue. It seems like mining GPUs were already overpriced and the price had to drop anyway because the amount of produced GPUs should be higher this year due to the higher competition.
I also doubt about the loosing interest to the cryptocurrencies from the side of miners because in this cace we should see a dramatical lose of hashrate in BTC network but everything seems to be fine: https://blockchain.info/en/charts/hash-rate?timespan=all

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May 21, 2018, 08:21:22 PM
 #17

To the underlined bit: This is quite different. Wall Street analysts expected the company to post earnings of a certain amount, but the company generally has a much better idea. If Amazon had said it expected to earn $1.24 and then posted $3.27, that would be more on point, but also not perfect since so much more goes into computing earnings than sales, so there's more likelihood of variance. When a company projects sales for the next quarter, it's generally the best indication of what is going to happen since nobody knows their business better than they do. On top of that, Nvidia is not known to sandbag sales numbers (by comparison, Apple is notorious for under promising so they can over deliver in their quarterly reports), so Nvidia's projection of a 2/3 drop in cryptp-related sales should be taken seriously as there's really no better authority on what they're going to sell than they are themselves. Lastly, Nvidia is likely warning about a trend they've already identified. At the time of the quarterly call, the current quarter is half done, so they already have some pretty decent sales data and trends for the current quarter, so when they're saying they're projecting a 2/3 fall, it's probably because they're already seeing the significant drop playing out. It's less of a prediction than it is an extrapolation of what's already happened.

I suspect Nvidia is probably experiencing the effects of what is happening in China as you point out. The drop in investment in mining is likely due to the uncertainty of ever recouping cost if the government is shutting down mines.

Bolded: you're definitely much more savvy than I am on those points.

I was thinking nvidia, samsung, russia and others poised to enter the ASIC hardware market could increase supply and reduce demand. Such could represent a chunk of nvidia's projections. I'm 100% clueless as to when proposed entry to market was supposed to occur, my timeframe there could be off by a significant margin. Perhaps we are witnessing a financial downside to the ASIC market transitioning from what many have labeled a centralized monopoly to a free market with reduced demand.

There has been so much media driven FUD against bitcoin over the past 2 years. Its becoming easy to assume anything negative said about crypto in has an origins story which can be traced back to a lame political agenda.

I do a lot of "traditional" investing (equities and such) and like reading about companies and how they make money, as opposed to what the stock is doing. Traders are more concerned with the stock, investors are more concerned with the company. The stock will eventually follow what the company does, if it falls out of whack occasionally due to traders. So my post about the projections and all that fell within my wheelhouse on this one due to my familiarity with how companies report information to investors.

As it applies to Nvidia, crypto has been big source of frustration to Nvidia's traditional customers, as miners have snapped up GPUs and caused shortages for gamers and other customers who want to buy GPUs for non-mining reasons. I'm not sure if Nvidia has really chased the crypto market though, I think it's much more a case of they make powerful GPUs for computers and gamers, and it happens to have utility in crypto mining. The drop in sales is definitely demand side though, not supply side.

Even though Nvidia did get a LARGE spike in a small amount of time from people who were buying GPU's for crypto mining, I know that they knew (as a smart business) to not ramp up production -- this is due to the fact that they knew GPU mining would crash at one point, and they'd be stuck with all this extra inventory with no one to sell it too.

So I know they didn't chase at all, they just sold their products normally to whoever had cash and did vow to their traditional market they would try to crack down on gpu crypto mining buyers - but this was all for show.


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May 21, 2018, 08:31:45 PM
 #18

I will be only happy if the prices for Video cards fall by 50%. They are too inflated and not acceptable.

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May 21, 2018, 08:58:51 PM
 #19

I may not agree because of his reasons but because of the desires of bitcoin to purchase bitcoin instead of mining them. Many investors don't have the capital and the time consumption used in setting up minning machine but instead, they ends of purchasing their coin faster without facing the hectic of the installation process or capital issues for mining machines.
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May 21, 2018, 09:58:03 PM
 #20

I will be only happy if the prices for Video cards fall by 50%. They are too inflated and not acceptable.

Keep waiting. In order for the sales drop to actually reflect like that it will probably take a year or two at minimum, and then you have to hope that the sales keep dropping instead of spiking back up. At the end of the day, it all comes down to how the market operates. If the price doesn't seem to have any significant upward incentive, in the same way new farms and farm upgrades won't have much incentive to actually get fired up, but we know that the market can boom at any time. Overall, when mining becomes less lucrative, governments can stop their nonsense debates about the mining industry to become a harming factor due to the power it consumes. That's one positive aspect. Cheesy
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