Bitcoin prices have experienced meteoric growth over the past few months as institutional investors and large corporations poured money into the digital currency, but the volatility of the cryptocurrency market has started to pick up its ugly head again.
The price of bitcoin fell to just over $ 34,000 on January 13 after rising to more than $ 40,500 on January 9th. Such volatility makes cryptocurrencies like bitcoin a risky bet for investors looking for stable returns. What’s more, some Wall Street businesses are worried about the value of cryptocurrencies going to zero.
However, there is no denying that cryptocurrencies are a hot asset class that many want. But is there a safer way to invest? The answer is yes, and the safer way is by NVIDIA (NASDAQ: NVDA) a hot growth stock that has set the market on fire over the past year.
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NVIDIA already benefits from the cryptocurrency
Miners in cryptocurrency use graphics cards from people like NVIDIA to “mine” digital currencies. Demand for cryptocurrency mining accounted for almost 5% of NVIDIA’s top line three years ago, when cryptocurrency mining was booming. The good news for NVIDIA investors is that the recent rise in cryptocurrency prices has led to a renewed demand from miners, especially since the launch of the company’s new Ampere cards.
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The graphics specialist sold $ 175 million in GPUs (graphics processors) to miners in the third quarter of fiscal 2021, according to RBC Capital Markets. Although this would be only 3.7% of the $ 4.73 billion in revenue generated by NVIDIA during the quarter, mining-related demand is to a greater extent good for the company as demand exceeds supply to higher prices led.
NVIDIA’s latest RTX 30 series graphics cards are too few, thanks to the huge demand from both gamers and cryptocurrency miners. The cards will apparently no longer be in stock once they are offered for sale. As a result, NVIDIA now says that GPU supply will remain slim through the fiscal first quarter, which ends in April.
NVIDIA also points out that sales of its latest RTX 30 Ampere cards follow twice the rate of previous RTX 20 series cards. This combination of incredible demand and a shortage has led to a rise in GPU prices.
Big wins ahead
Mining in cryptocurrency has a dual impact on NVIDIA’s business – one in the form of increased demand from miners and the other in the form of higher prices. What’s more, the company may consider making cards for crypto-mining if it sees a huge demand from miners. NVIDIA says it is not sure how much of its sales are currently coming out of the market.
But the shortage of graphics cards and the efficiency of the new RTX cards for digital currency mining suggest that the demand for mining may be strong. It is understood that an Ethereum miner can recover their investment in an RTX 3080 within 233 days, a major improvement over the RTX 2080, which reportedly took two and a half years to become profitable.
In addition, RBC says recent technical changes in Ethereum mining will force miners to upgrade to new hardware. NVIDIA can therefore earn big in 2021 through the cryptocurrency market.
Put in the primary catalysts on which NVIDIA sits – data centers and video games – and it becomes clear why it would be better to purchase the cryptocurrency through the disk maker instead of buying cryptocurrencies directly. NVIDIA has a diversified business and this will help investors avoid the speculative nature of the cryptocurrency market.