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Leo Says 56 – Did Nvidia sell $175 million of GPUs to miners?

The web is awash with reports that Nvidia may have sold US$175 million of GPUs to crypto miners. If true this would have a significant knock-on effect that hurt supplies of graphics cards for gamers. This leads to the inescapable conclusion that you are unable to buy an RTX 3080 because miners have bought the lot. But is it true?

Leo's Notes:

There are multiple reports that Nvidia may have sold US$175 million of GPUs to miners, and that has hurt supplies for gamers.

The root of the story is a report that Mitch Steves, an analyst for RBC Capital Markets had predicted that Nvidia would sell US$150 million of GPUs to miners but instead sold US$175 million. The problem is that I cannot find that note by Mitch Steves

KitGuru asked Nvidia for a comment on the Barron's story and were told
‘I haven't got any comment for you just yet… bear in mind it's Thanksgiving weekend so probably will have to wait until Monday on this’ which is fair enough.

Might this story be true? Sure thing. Crypto is booming and there is certainly demand.
You have to balance the return from the crypto along with the cost of the hardware. We understand miners are mainly based in China, Poland, Russia and the Baltic.

One driving force for new mining hardware is given as the upcoming network upgrade of the Ethereum blockchain which is scheduled to take place sometime in December which demands that miners switch over to more efficient mining hardware with a minimum 8GB of memory.
RTX 3080 seems ideal so the idea that Nvidia might supply kits of parts to lower tier Chinese graphics companies makes perfect sense.

If we guess a kit of GPU and memory costs UDS$350 then USD$175 million amounts to 500,000 kits of GA102. Adjust the price to USD$500 and you’re looking at 350,000 RTX 3080.
Surely those numbers would mean that Scan, Ebuyer, Overclockers and Amazon would each receive thousands more high end graphics card here in the UK which would clearly be significant for gamers.

It is not clear whether Nvidia would book Mining sales under Gaming or some other category.

Nvidia Q3 2021 results
$2.27 billion Gaming (includes Desktop, Laptop and Console)
$1.9 billion Data Centre
$236 million Professional Visualization – Workstation Graphics
$125 million Automotive
$4.726 billion total revenue
which suggests a ‘missing’ $195 million

We have identified OEM/IP as 4 percent of the total, just like Automotive which amounts to some $125 million. Granted that still leaves $70 million ‘missing’ from Nvidia’s accounts but we’re now talking about rounding errors and pocket change.

Could we believe that Nvidia would do the dirty on their loyal customers? Sure thing, why not. Nvidia has never been shy of chasing revenue and profits as their stellar results show.

Let’s not forget that Nvidia took the idea of reference design products and created RTX 2080 Founders Edition which was effectively a reference design that was sold directly by Nvidia. Now with RTX 3080 and 3090 we have Founders Edition products that are distinct from a reference design and which sell in direct competition to partner cards.

The problem here is that it is not only Nvidia RTX 3000 in short supply. You will also struggle to buy RTX 2000 and GTX 1000 which are both manufactured by TSMC and we have also seen that AMD Big Navi and earlier AMD hardware are all out of stock or priced at frightening levels.

Might this mining story be true? Sure thing, but the most likely explanation is that Nvidia and AMD are faced with massive demand and the consequence is short supply and crazy high prices, and the result is a large number of very annoyed customers.

KitGuru says: It is tempting to blame crypto miners for the shortage of Nvidia Ampere graphics cards however it seems clear that demand is huge for all graphics cards while supply is constrained. 2020 has been a weird and unpleasant year.

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