What a bizarre move. Why would they do this?
The simplest market solution to high demand and inadequate supply would be to raise the price of the cards. This would maximize short-term profits but Nvidia felt it was not the right strategic move. Why not? Here are some guesses:
- pricing gamers out of the GPU market would damage Nvidia's historical market - video games
- pricing AI users out of the GPU market would damage an exciting new market Nvidia is working very hard to cultivate
- tying a large fraction of your business to cryptocurrency is risky given the volatility of that market
I think Nvidia sees gaming and AI as viable long-term markets and feels very invested in maintaining the health of those markets and Nvidia's participation in them. They are much less interested in cryptocurrency mining customers because they don't see a long-term future for themselves there. Nvidia is willing to take a short-term hit to profits to get more of their products into the hands of gamers and AI researchers.
However Nvidia has not completely forsaken short-term profitability. They have substantially raised the price of GPUs and they are making considerable amounts of money selling GPUs to miners. They are trying to take a middle path and balance competing interests.
AI, get your tech in, get them them invested on software level and as it scales demand will go up and stay up. Just see how long Intel has been around. Similar position and inertia is sure way to make money.
Crypto on other hand purely chaces profits. And you can't really rise the prices for partners, that is board manufacturers too much. So even if end user prices are high, not all or even big chunk transfer to Nvidia...
They don't mind selling some GPUs to miners, of course. But mining is disrupting the supply of GPUs to the gaming market which could hurt future growth of the gaming market in general as well as Nvidia's share of it. And Nvidia is a company that has no qualms about artificially segmenting markets to apply price discrimination or otherwise manipulating customers as much as they can get away with. So they are trying to separate the markets for gaming and mining by any means they can think of.
Semiconductor fab planning operates at least a year in advance, and even then there are limits, TSMC has other customers and NVIDIA can't order 100% of TSMC's supply even if they wanted to.
But in a day, crypto prices can 10x, or 0.1x, and this occurs relatively frequently (potentially tied to large capital injections from a questionable "stablecoin" called Tether). When that happens, mining suddenly becomes 10x as profitable, and miners hoover up every card on the market for the next 6 months, so the market goes through a prolonged shortage and periods of very high prices (as market economics dictate). Then when it crashes, miners dump all the cards back on to the market, and then NVIDIA has to drop prices to compete with a flood of used cards. It's all basically impossible to plan around given the realities of silicon production.
2. Product segmentation (nvidia also make mining cards)
If the owner uses it to train a ML model? Is that legit then? Or can general purpose GPUs only be single purpose for games. For gamers?
We can just dispense with the part of the discussion where we argue about why we think it is or isn't legitimate and just agree that we have mutually incompatible world views.
I do hope it works out for humanity tho, maybe we are alone in the universe and we are squandering the most unique and precious outcome of random chance, life.
Binance. Mt Gox. QuadrigaCX. Crytopia. Poly Network.
Yeah, decentralised.
Also, censorship resistant? Tell that to people having their accounts on the "decentralised" money system being banned for using crypto that's gone through a mixer.
The public blockchain makes censoring a given user even easier, because your transaction log is public knowledge.
I always loved this one. Magic The Gathering Online: Exchange.
No, that's not a joke, the owner took a pre-existing website for trading Magic cards and turned it into a crypto exchange. And no, that's not a typo, it's not "Magic The Gathering: Online Exchange", they weren't even trading the real cards, they were virtual cards for the game Magic The Gathering: Online.
They also got robbed before they opened to the public, were insolvent for all their life, found a sucker to take the blame (who did serve time), then founded another shitcoin, fell out with the others, founded another shitcoin.
There's also their claim that it's good for gamers. It's certainly not.
If people using the nVidia software libraries - ML edu organization, gamers and game developrs - can't get their hands on their software, they won't use nVidias proprietary libraries and ignore their market differentiation features. This makes nVidia's moat against competition worse in the longer term while serving finnicky cryptobros in the short term.
nVidia doesn't want that.