In a recent statement that has raised eyebrows, Nvidia’s Chief Technology Officer, Michael Kagan, has asserted that cryptocurrencies bring “no value” to society, while artificial intelligence (AI) applications such as ChatGPT present more valuable uses for the company’s GPU processing capabilities.
Nvidia, the renowned manufacturer of graphics processing units (GPUs), has long reaped financial benefits from the rise of cryptocurrencies, such as Ethereum, which heavily relied on GPUs for mining during previous crypto booms. The demand from miners willing to pay almost any price for GPUs led to soaring prices for the hardware, and Nvidia even launched a dedicated line of mining cards called the CMP series.
However, the demand for GPUs in the cryptocurrency space has seen a sharp decline, particularly as Ethereum has transitioned from a proof-of-work to a proof-of-stake mechanism, eliminating the need for GPUs in the mining process. In fact, the entire cryptocurrency community’s need for GPUs is now considered to be minimal and almost negligible.
In light of this shift, Nvidia’s CTO Michael Kagan stated, “All this crypto stuff, it requires parallel processing, and Nvidia [products] are the best, so they [miners] bought a lot of stuff, and then cryptocurrencies collapsed because cryptocurrencies have not brought anything useful to society, but AI can.”
Kagan’s comments have been met with skepticism, given Nvidia’s previous eagerness to sell GPUs and mining cards to the crypto community during the peak of the mining craze. In 2021, Nvidia even released software to limit the mining performance of its RTX 30 series GPUs, primarily due to pressure from gamers who struggled to purchase GPUs at regular prices. However, the company later “inadvertently” released a development driver that lifted the mining performance restrictions.
As of 2023, the industry’s focus has shifted to AI, which also requires a substantial number of GPUs. Nvidia’s stock price has been surging due to this trend, with companies such as OpenAI purchasing an estimated 20,000 to 30,000 Nvidia A100 accelerators for training and service provision.
Nvidia’s current stance reflects this shift, as the company now emphasizes the value of AI applications like ChatGPT, which utilize GPU processing, over the diminishing relevance of cryptocurrency mining.
Critics, however, question the consistency of Nvidia’s position, given its prior financial gains from the cryptocurrency mining sector. The company’s pivot to AI applications, while strategically sound, has left some observers pondering the authenticity of the CTO’s recent remarks.