NVIDIA Forgot That Crypto Crashes Are Bad for Business

Those who fail to learn from history are doomed to repeat it. Soaring demand for graphics cards from cryptocurrency miners is not a new phenomenon for NVIDIA (NASDAQ: NVDA). Neither is the inevitable crash in demand as crypto bubbles burst.

NVIDIA's second-quarter results were about as bad as expected. The company warned earlier this month that it would fall far short of its previous outlook as demand for gaming graphics cards weakened. Inventory levels at channel partners had become bloated, leading to a major slowdown in purchases. NVIDIA's gaming revenue tumbled 44% from the previous quarter .

There were multiple factors driving lower gaming demand, but the collapse of cryptocurrency prices may be the biggest. NVIDIA's graphics cards are used to do the number crunching necessary to mine various cryptocurrencies, and once the return on investment for miners vanishes as prices drop, so to does demand for NVIDIA's products.

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Source Fool.com