First Mover Asia: Did Nvidia Profit From Crypto Mining? Consider Its Manufacturing Partners’ Stocks; Cryptos Have a Rough Day

The manufacturer of graphics processing units has been reluctant to acknowledge the role its products play in crypto mining; bitcoin and ether plummet.

AccessTimeIconMay 9, 2022 at 10:41 p.m. UTC
Updated May 11, 2023 at 5:23 p.m. UTC

Good morning. Here’s what’s happening:

Prices: Bitcoin and other major cryptos plummet.

Insights: Nvidia has a peevish relationship with the crypto industry.

Technician's take: BTC's breakdown is confirmed and upside appears limited.

Catch the latest episodes of CoinDesk TV for insightful interviews with crypto industry leaders and analysis. And sign up for First Mover, our daily newsletter putting the latest moves in crypto markets in context.


Bitcoin (BTC): $31,199 -8.5%

Ether (ETH): $2,305 -8.8%

Biggest Gainers

There are no gainers in CoinDesk 20 today.

Biggest Losers

Asset Ticker Returns DACS Sector
Algorand ALGO −15.7% Smart Contract Platform
Litecoin LTC −15.1% Currency
Cardano ADA −15.0% Smart Contract Platform

Another difficult day for cryptos

And the beatdown goes on.

Bitcoin continued to spiral in Monday trading, dropping to levels it hasn't seen since early July and is at less than half its price in late November when it approached $70,000.

The euphoria of wider adoption and growing institutional interest coupled with growing awareness of blockchain-fueled projects has long since evaporated, replaced by fear of higher interest rates, geopolitical turmoil and a looming recession. The largest cryptocurrency by market value was recently trading at just over $31,000 after dropping well below that threshold earlier in the day. But bitcoin's more than 8.5% plunge over the past 24 hours was better than most major cryptocurrencies fared on Monday as investors fled assets with even an inkling of risk. The riskier the asset the faster the exit.

Terra's LUNA token was off more than 30% over the same period after the Luna Foundation Guard, the Singapore-based, non-profit established to support the Terra network, tweeted that would loan $1.5 billion in bitcoin (BTC) and terraUSD (UST) to defend the peg of its algorithmic stablecoin to the U.S. dollar. CRO tumbled more than 16% at one point. ADA and DOT were off about 14%.

Ether, the second-largest crypto by market cap, was more resilient, roughly mirroring BTC's more modest drop. Trading volume increased slightly, reflecting the pickup in sellers' activity, although it remained well off 2022 highs earlier in the year. The Fear & Greed index remained in the extreme fear range where it has spent the past month amid investors' growing concerns about inflation, central bank monetary hawkishness that could send the global economy into recession and the widening aftershocks of Russia's unprovoked invasion of Ukraine. Daily, weekly and monthly charts for bitcoin have all trended negative.

Crypto's bloodbath tracked steep declines in equity markets with the tech-focused Nasdaq dropping over 4.3% and the S&P 500 and Dow Jones Industrial Average falling 3.2% and nearly 2%, respectively. Even gold, a safe-haven asset that typically rises in stressful periods, declined 1.5%.

Mark Lurie, the CEO of crypto trading software provider Shipyard Software, noted the impact of Terra's announcement, but called it "noise relative to the macro story" that has sucked in "growth assets," including Amazon (AMZN), Alphabet's (GOOG) Google and some of the biggest names in technology.

"This macro drop is probably for two converging reasons,"

Lurie wrote that the macro drop was due to rising interest rates that were making "safer assets more attractive" and pulling "capital from growth stocks." But he also highlighted the easing of pandemic restrictions that has reduced consumers' reliance on technology. "Many people are returning to offline buying behaviors, hurting e-commerce and tech stocks that did the best during lockdowns," he wrote.


S&P 500: 3,991 -3.2%

DJIA: 32,245 -1.9%

Nasdaq: 11,623 -4.2%

Gold: $1,852 -1.5%


Here's why Nvidia downplayed its mining business

Nvidia (NVDA) has always had a testy relationship with crypto and its decision to re-write history cost the company $5.5 million.

In the late 2000s, its Graphics Processing Units (GPU), built primarily with gaming in mind, found a second life: Their ability to do parallel processing, used to create photo-realistic graphics for games, meant they could crunch through large amounts of data with ease, launching a new world of computing.

General Purpose GPU Compute, or GPGPU compute, is responsible for the AI and Big Data boom. These GPUs were a requirement for virtually every data center, and Nvidia’s stock rose like a rocket with this demand.

GPGPU also meant that GPUs were essential for mining crypto. First bitcoin and then ether.

As we all know, the demand caused a massive shortage of graphics cards throughout the first crypto boom of 2016-2018. Gamers and PC enthusiasts were annoyed because the latest gen cards were impossible to find, meaning that they had to game with yesterday’s tech.

And Nvidia did all it could to write this out of history. While Nvidia makes a specialized mining card, it strongly discourages mining with its regular gaming cards and tries to disable the ability to mine with them. This leads to a back and forth between the company and miners that try and break this lock.

Nvidia’s annoyance with mining also resulted in its downplaying the impact it had on its business in U.S. Securities and Exchange Commission filings and attributing it to gaming.

This was a strange decision on Nvidia’s part because crypto’s fluctuations were easy to see on the stock prices of its graphics card manufacturing partners in Asia. Shipments of new high-end motherboards, a key component for PCs, didn’t seem to be in sync with the insatiable demand the market had for GPUs, suggesting it wasn’t high-end gaming PCs the market wanted but only one component.

While Nvidia designs the GPU at the core of a graphics card, companies in Taiwan manufacture the board these cards are attached to called a “graphics card” (sometimes called an add-in board by analysts).

Gigabyte, Micro-Star International (MSI), and Zotac (its parent is listed in Hong Kong as PC Partner Group) are some of the biggest names in the business. Usually, these are relatively boring stocks because they are manufacturing companies that are at the behest of chip designers like Nvidia.

It is Nvidia, not Gigabyte, that makes the proprietary and valuable part of a graphics card, and the relatively low income and profit margins for Gigabyte reflect this.

The fortunes of these companies changed during the crypto boom of 2017-2018. Miners then needed every graphics card they could get their hands on to profit from the then-nascent Ethereum protocol and its role in the initial coin offering (ICO) bubble.

Investors hungry for exposure to the market bought all the stock they could of Gigabyte, MSI (2377) and PC Partner (1263). The number of investment vehicles for crypto then were limited as registered crypto custodians didn’t exist at the time. In November 2017, Bloomberg specifically called out these stocks as opportunities for investors seeking a macro proxy for crypto.

Eventually, the ICO bubble burst and a crypto crash happened. Students of bitcoin’s history know that the crypto winter of 2018 was a particularly chilly one as prices dropped significantly and didn’t recover for a long time.

Gigabyte, MSI and PC Partner’s stocks deflated as fast as they rose. Demand from mining companies evaporated overnight, and analysts warned that these companies would be in a tough position with layoffs and restructuring. Nvidia called this a “crypto hangover” as it took a $23 billion write-down on excess inventory that it just couldn’t move. Nvidia-competitor AMD (AMD) had the same problem.

Although crypto’s material impact on Nvidia’s bottom line was patently clear to informed observers (it's not clear why the SEC is dealing with this only now), the company still tried to hide it. Its decision is likely because its data center and enterprise businesses proved to be stalwart pillars of revenue, and the company didn’t want investors to be spooked.

The question is, as we head into another crypto winter, will history repeat itself?

Technician's take

Bitcoin daily chart shows support/resistance, with RSI on bottom. (Damanick Dantes/CoinDesk, TradingView)
Bitcoin daily chart shows support/resistance, with RSI on bottom. (Damanick Dantes/CoinDesk, TradingView)

Bitcoin (BTC) confirmed a break below its short-term uptrend and is now targeting lower support at $27,000 and $30,000. Sellers could remain active given the loss of upside momentum on the daily, weekly and monthly charts.

BTC was down by as much as 11% over the past 24 hours and 20% over the past week.

Further, bitcoin is roughly 50% below its all-time high near $69,000, achieved in November of last year, compared to an 80% peak-to-trough decline during the 2018 crypto bear market. At this point, price action does not indicate a major cycle low.

The relative strength index (RSI) on the daily chart is the most oversold since Jan. 24, which preceded a relief rally. This time, however, BTC is at risk of breaking below its year-long price range, which means buyers could continue to take profits on short-term recoveries.

Important events

3 p.m. HKT/SGT(7 a.m. UTC): China new loans (April)

CoinDesk TV

In case you missed it, here is the most recent episode of "First Mover" on CoinDesk TV:

What's going on in the crypto markets? "First Mover" dove into markets analysis with industry executives in key markets to discuss the reasons for the dramatic slide, how long it may continue and what to make of the latest news involving the stablecoin UST, which briefly lost its peg to the U.S. dollar over the weekend. Guests included Swan Bitcoin CEO Cory Klippsten, Valkyrie Chief Investment Officer and co-founder Steven McClurg and Coinchange CEO Maxim Galash.


Bitcoin Funds Had Surprise Inflows as Markets Plunged: Some $45 million flowed into these funds in the week through May 6. Investors apparently bought the market dip.

Bitcoin Tumbles to Lowest Price Since July 2021 as Market Panic Grows: Cryptos slumped across the board all weekend and added to declines Monday morning as global equity markets swooned.

Coinbase Faces Q1 Earnings Challenge as Crypto Markets Weaken: Coinbase’s first-quarter results could see some soft spots as crypto prices continue to retreat.

Mark Zuckerberg Says Instagram Will Test NFTs Starting This Week: Meta (FB) is also working on 3D augmented reality NFTs that will be compatible with Instagram stories.

Luna Foundation Guard Lends $1.5B in BTC and UST for Stablecoin Peg: The move comes after UST briefly lost its peg to the U.S dollar over the weekend.

Longer reads

Why on Earth Would Land Be Scarce in the Metaverse?: With their “skeuomorphic” approach to real estate, Web 3 metaverse projects may have fallen into a trap of their own making.

Other voices: Making money on crypto? Yes, the IRS expects a cut (CNN)

Said and heard

"The project never launched, partly because Facebook burned its reputation to the ground selling our data and potentially destabilizing democracy. So regulators worldwide acted on our behalf to say that Facebook – with its billions of users and foothold within the internet – couldn’t be trusted with a radical new attempt for currency design. [Nouriel] Roubini’s project is similarly ambitious – creating an alternative safe haven asset to U.S. Treasurys that also has “payment features.” It might also offer yield, making it more attractive to hold, although in a blog post, Roubini notes that USG’s fluctuating value may limit its use as a form of payment." (CoinDesk columnist Daniel Kuhn) ... "Stocks will enter a bear market, at least by most conventional definitions, when the S&P 500 has dropped 20% from its last peak. As of Friday afternoon, the index had dropped nearly 14 percent from a Jan. 3 record. A 2.7% drop in late-morning trading on Monday meant the index was even closer to the bear market threshold now." (The New York Times) ... "Still, investors are parsing disparate data about the financial health of consumers and businesses. The U.S. economy shrank by 1.4% in the first quarter, the worst showing since early in the pandemic, in spring 2020. However, consumer and business spending remained strong. Bank executives have pointed to high spending in categories like travel and entertainment as reasons for optimism. Market volatility resulting from higher interest rates and the war in Ukraine have dinged big banks’ deal-making businesses. The market for initial public offerings has been largely shut down over the past several months." (The Wall Street Journal)


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Damanick Dantes

Damanick was a crypto market analyst at CoinDesk where he wrote the daily Market Wrap and provided technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio strategist and does not invest in digital assets.

James Rubin

James Rubin was CoinDesk's U.S. news editor based on the West Coast.