When Michael Kagan, Nvidia's (NVDA) CTO, shared his views on the crypto industry in an article with The Guardian on March 26, many may have expected a rather negative reaction from the crypto community.
"I never believed that[crypto] is something that will do something good for humanity. You know, people do crazy things, but they buy your stuff, you sell them stuff. But you don't redirect the company to support whatever it is," Kagan explained the company's stance on crypto mining that relies on its hardware. In his opinion, artificial intelligence and OpenAI’s ChatGPT chatbot are a much more sensible use of extensive computing power. The development of ChatGPT relied heavily on the hardware from Nvidia. The chatbox used a supercomputer based on about 10,000 graphics cards during the training sessions of its first version.
Instead of criticizing Nvdia, many crypto investors and miners have admitted that there may be something to the chipmaker's approach, especially since Ethereum's transition to a proof-of-stake (PoS) protocol in 2022.
Although many members of the crypto community disagree with the view that cryptocurrencies lack practical value, they understand the company's approach from a business perspective. For instance, Stefan Carter, a business advisor for startups commented in the Twitter discussion that he does not think it makes sense to criticize Nvidia for its decision to shift its focus to AI. "They're a legit business and always building something of value. Plus, with Ethereum moving to PoS, the demand for GPUs has decreased," he added.
The crypto miner with the Twitter nickname Hashiimot0 noted that the algorithms used by AI are very similar to those of crypto mining. "So basically what they are saying is we are changing nothing, buy our products for the next tech wave," Hashiimot0 explained the impression created by Kagan's interview.
Nvidia's path to the crypto industry wasn’t a straight line. It started in 2017, when the Nvidia GeForce GTX 580, designed for gaming, became popular among crypto miners. "Our PC OEM revenue increased by approximately 200% primarily due to strong demand for GPU products targeted for use in cryptocurrency mining," the company said at the time, highlighting that the popularity of its GeForce GPU products caused a 90% increase in revenue.
Although the sales of this graphics card brought the company high revenues, Nvidea still marketed its hardware for gamers. In 2018, Nvidia paid $5.5 million in fines to the U.S. Securities and Exchange Commission (SEC) for failing to disclose revenue from the sale of its hardware to crypto miners.
Nvidia CEO Jensen Huang told the information portal VentureBeat in 2018 that it was challenging for a company to determine the ultimate use of its hardware. "My point is that we just don't know - when we're going through what we see as our own sales and what the percentage of Bitcoin is in our own sales, what we don't know is how much inventory AMD pushed into the channel," he stated, adding that "there's no way for us to calculate that."
However, when the market experienced a chip shortage in 2021, caused in part by the Covid-19 pandemic, gamers had major problems buying GPUs. To ensure gamers had access to its products, Nvidia introduced hashrate restrictions for its RTX 30 series. When a certain mining workload for Ether was detected, the hardware lowered the hashrate twice. In addition, Nvidia announced its dedicated CMP HX mining GPUs to deter crypto miners from GeForce RTX 3060 designed for gamers.
In 2022, there were several attempts to invent a workaround for the mining limitations. Some hacker groups, like LAPSUS$, sold their custom drivers to unlock the hashrate limit. Others offered so-called free software, which turned out to be malware. The malicious programs attacked miners' computers in various ways, from keyboard capturing to cryptojacking.
"All this crypto stuff, it needed parallel processing, and [Nvidia] is the best, so people just programmed it to use for this purpose," Kegan told The Guardian, explaining the history of the company's involvement in the crypto industry.
"We were heavily involved in also trading: people on Wall Street were buying our stuff to save a few nanoseconds on the wire, the banks were doing crazy things like pulling the fibers under the Hudson taut to make them a little bit shorter to save a few nanoseconds between their data center and the stock exchange," Nvidia's CTO emphasized the diversity of the company's markets.