Nvidia, a tech giant that has benefitted greatly from selling graphics processors to crypto miners for currencies like Bitcoin and Ethereum, recently expressed that cryptocurrencies are useless to society. The company believes GPU computing power can be more beneficially employed in AI applications like chatbots than mining.
Nvidia’s CTO, Michael Kagan, noted in an interview with The Guardian that the demand for parallel processing for crypto mining led to the widespread use of Nvidia’s GPUs for this purpose.
However, Kagan believes that cryptocurrencies are useless for society and that the significant investment in GPU hardware for mining was unsustainable. Instead, he suggests that GPU computing can be more effectively harnessed to develop artificial intelligence applications, such as smart chatbots, which have more significant potential to bring value to society.
The development of Microsoft’s ChatGPT relied on a relatively modest number of compute GPUs – only 10,000 -, yet it has the potential to benefit people worldwide. In contrast, mining cryptocurrencies such as Bitcoin and Ethereum is estimated to have required hundreds of thousands of GPUs. While investing in cryptocurrencies may have been profitable for some, Microsoft’s approach to GPU usage has resulted in a product with broad practical applications.
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Bitpro Consulting analysts estimated that Ethereum miners spent $15 billion on GPUs between early 2021 and mid-2022, buying some of the best gaming graphics cards available, which drove up demand and caused gaming hardware prices to soar beyond the average consumer’s budget. Even though Nvidia stated that it only sold its CMP GPUs to professional miners, it has been revealed that many crypto miners bought its gaming graphics cards at retail prices higher than the MSRP.
Michael Kagan shared his doubts regarding the potential of cryptocurrencies to bring about positive changes to humanity. He stated that he never believed in their usefulness and acknowledged that people sometimes engage in irrational behavior, such as purchasing products like graphics processors for mining.
However, Kagan thought companies should not shift their priorities to support such activities, even if they profit from them. Despite selling its products to cryptocurrency miners, Kagan implies that Nvidia did not actively promote cryptocurrencies as a valuable technology.
Nvidia’s success in the stock market during the last two years is linked to the cryptocurrency industry. In 2021, the company launched a graphics chip named CMP, specially designed for Ethereum mining, while limiting sales of gaming-focused graphics cards.
However, CMP sales could have been more impressive; in the third quarter of 2022, they dropped by 77%. As Ethereum moved to proof-of-stake at the end of 2022, demand for Nvidia cards used for mining dissipated, which is a fair criticism.
In the lead-up to the Ethereum Merge on September 15, 2022, Nvidia’s gaming GPU revenue, mainly still being used for crypto mining despite community workarounds, dropped to $1.57 from the previous year’s $3.2 billion. As a result, Nvidia’s sales fell along with the demand for Ethereum miners. Interestingly, both Nvidia’s share price and the price of Ethereum reached all-time highs within a week of each other before both fell significantly.
In a previous interview with The Guardian in 2021, Nvidia’s CTO, Michael Kagan, expressed his belief that cryptocurrency does not benefit society. Kagan stated that cryptocurrency, unlike artificial intelligence (AI), has not made significant contributions to the advancement of society.
According to him, the cryptocurrency market was fueled by people’s desire to earn money quickly, and it collapsed because it did not offer anything valuable to society. Kagan further noted that crypto miners initially purchased Nvidia’s GPUs because of their parallel processing capabilities.
Still, eventually, the demand for GPUs from miners subsided after the Ethereum network transitioned to a proof-of-stake consensus algorithm. Instead, the company has shifted its focus to AI, which Kagan believes can significantly improve society in numerous ways, such as helping with scientific research, autonomous vehicles, and healthcare.