To reply to both of you, chip sales are a leading indicator of sentiment. So follow my logic here: if chip sales are weak, it's because miners aren't investing in new equipment, which is likely because they don't think it will pay for itself. This means they don't see the price increasing. Miners, more than anyone else, are likely to have a better feel for the future price because their viability is at stake. When miners expect the price to continue rising, they can run losses in the near term to buy more equipment because they expect the higher price to eventually make up for it. So the inverse is the conclusion here. The fact that nvidia, which is a public company well-versed in issuing public guidance under SEC rules, was so blindsided by the weakness for crypto chips in the latest quarter is an indication of how fast the market is slowing down, which indicates how bleak miners view future price prospects to be.
The difference between nvidia and other crypto chipmakers is nvidia is a public company. They issue forward looking guidance and it was to meet certain requirements. Rose private chipmakers have no such obligation and are reporting numbers lookin backwards, so Bitmain's profits in 2017 are a lower quality data point compared to nvidia and also wildly outdated at this point.
That's why I think nvidia's guidance portends to poor sentiment by miners, which in turn portends to a poor price outlook going forward.
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There's a statistic posted here which claims bitcoin's total hash rate increased by "155%" from january 2018 to the present.
Despite Bitcoins 2018 price slump, the dominant cryptocurrencys hash rate continues to surge at an astonishing pace. Although the value of Bitcoin has decreased by 53% since January 1st, 2018, the hash rate has increased 155% in the same time period.
The continued growth in hash power demonstrates a strong, continued belief in Bitcoin by miners worldwide and may foreshadow a hidden bullish trend.
https://bitcointalk.org/index.php?topic=4670899That could indicate that miners are buying additional mining hardware in anticipation of bitcoin's price rising.
There could be one main issue present in the GPU versus ASIC paradigm that explains nvidia's declining demand report. "Nanometer scale in semiconductor manufacturing process." For a time, GPUs manufactured by companies like nvidia had an advantage over ASICS in that they were manufactured on a smaller nanometer scale. Smaller nm silicon process generally indicates lower power consumption and a greater number of transistors per area, which can translate to greater overall functionality. GPUs having this advantage translated to them being competitive against ASIC designs which were more optimized towards cryptographic functions.
I think over time, ASICS have evolved and improved enough in terms of nm process to where GPUs are no longer as competititve. And so we see nvidia's GPU demand for mining purposes declining significantly. While the overall hash power of bitcoin's miners increased by 155%.
That's the closest I can come to explaining it.
If you want numbers, nvidia's current GPU's are fabricated @ 12 nanometers.
While bitmain's ASICS are fabricated @ 16 nm.
I think the gap between GPUs and ASICs used to be much larger, which gave GPUs a better competitive edge.