Bitcoin prices have seen meteoric growth in recent months, as institutional investors and large companies poured money into the digital currency, but the volatility of the cryptocurrency market has started to rise again.
The price of bitcoin fell to just over $ 34,000 on January 13, after rising to more than $ 40,500 on January 9. Such volatility makes cryptocurrencies like bitcoin a risky bet for investors looking for stable returns. What’s more, some Wall Street companies are concerned about the value of cryptocurrencies going to zero.
However, there is no denying that cryptocurrencies are a hot asset class that many want a share of. But is there a safer way to invest? The answer is yes, and the safest way is through NVIDIA (NASDAQ: NVDA) – a high-growth stock that ignited the market last year.
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NVIDIA is already benefiting from the cryptocurrency boom
Cryptocurrency miners use graphics cards like NVIDIA to “mine” digital currencies. Demand related to cryptocurrency mining represented almost 5% of NVIDIA’s revenue three years ago, when cryptocurrency mining was booming. The good news for NVIDIA investors is that the recent rise in cryptocurrency prices has generated 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 processing units) to mining companies in the third fiscal quarter of 2021, according to RBC Capital Markets. Although this represented only 3.7% of the $ 4.73 billion in revenue that NVIDIA generated during the quarter, mining-related demand is very good for the company, as demand outstripping supply led to higher prices.
The latest graphics cards in the NVIDIA RTX 30 series are in short supply thanks to the high demand from both players and cryptocurrency miners. The cards are supposed to be out of stock as soon as they go on sale. As a result, NVIDIA now says that the GPU supply will remain thin during the first fiscal quarter, which ends in April.
NVIDIA also points out that sales of its latest RTX 30 Ampere cards are keeping up with double the rate of previous RTX 20 series cards. This combination of incredible demand and lack of supply led to a rise in GPU prices.
Big gains ahead
Cryptocurrency mining will have a double impact on NVIDIA’s business – one in the form of increased demand from mining companies and the other in the form of higher prices. In addition, the company could consider making cards dedicated to crypto-mining if it sees substantial demand from miners. NVIDIA says it is not sure how much of its sales come from this market at the moment.
But the scarcity of graphics cards and the efficiency of the new RTX cards for mining digital coins indicate that the demand for mining may be strong. An Ethereum miner can recover its investment in an RTX 3080 in just 233 days, a huge improvement over the RTX 2080, which would have taken two and a half years to become profitable.
In addition, the RBC says that recent technical changes in Ethereum mining will force miners to upgrade to new hardware. Therefore, NVIDIA can gain a lot in the cryptocurrency market in 2021.
Add the primary catalysts NVIDIA is installed in – data centers and video games – and it’s clear why it would be better to get into the cryptocurrency craze through the chip maker rather than buying cryptocurrencies directly. NVIDIA has a diversified business and will help investors avoid the speculative nature of the cryptocurrency market.