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Home » Chip Boom and Bust
Analysis

Chip Boom and Bust

How the Crypto Rout Affected Nvidia and Intel Businesses
July 13, 20223 Mins Read
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Chip Boom and Bust
Chip Boom and Bust
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Things have been interesting as of late in the crypto market. 

The returns on some of the major tokens that are available – Bitcoin, Ethereum, Litecoin- have been astronomical and it has even caught the attention of some of the biggest financial institutions today. 

This has led to a resurgence of retail investor activity all honing in on the hope that they can ride this momentum. 

There are other ways to cash in on the cryptocurrency boom. 

Skilled investors have found that they can set up their own “mining units”, a key component in how cryptocurrency’s main blockchain functions, through their own home PC. 

This article will explore how this trend has affected markets close to it, as well as how the recent crypto crash further changed the dynamic of certain prices. 

How are Crypto and Nvidia/Intel Connected?

As mentioned briefly, mining is a key aspect of the cryptocurrency ecosystem.

As transactions get logged within the blockchain (usually in the form of trades in cryptocurrency), a complex system of uncentralised “miners” help lend computing power towards completing each transaction securely and without fault. 

In the early days of cryptocurrency, this process was easily achieved through the combined efforts of standard PCs and their internal processing power. 

As more people sought to enter the cryptocurrency market through mining, more computing power was needed. 

This led to intrepid miners building specialized “mining PCs” that focus solely on GPU (graphics processing units) to help bolster their computing power. 

What Happened with Crypto?

All the demand that occurred for GPUs, which in this case was provided by Intel and Nvidia, led to a sharp increase in the price for the graphics cards that can provide adequate power to continue mining efficiently. 

What was once reserved for the realm of gamers and video editors suddenly became inflated with miners looking to stake their claim on the blockchain. 

That is, until the cryptocurrency crash that occurred in the past few months.

Whether it was set off by the crash of Terra Luna, a general apprehension to Bitcoin, or something else, the cryptocurrency market began hemorrhaging value. 

With such a sudden loss in value, miners suddenly were not incentivised to pay such high prices for graphics cards that would net them less than the cost of their mining set-up. 

As such, this entire “chip boom” that occurred through the onset of a market frenzy with cryptocurrency, eventually led back to a price correction following a larger cryptocurrency price crash. 

Despite also affecting the stock of different chip manufacturers, investors in these securities should take solace in the fact that their losses are far better than those incurred by long holders of cryptocurrency in general. 

Note: Please do not invest money or assets in the financial markets that you cannot afford to lose. This article should not be construed to be investment advice and is for information purposes only

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