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> I [nvidia CEO] don’t think we could have seen it [massive effect of Ethereum merge on bottom line]. I don’t think I would’ve done anything different, but what

by yuan43 4y ago

> I [nvidia CEO] don’t think we could have seen it [massive effect of Ethereum merge on bottom line]. I don’t think I would’ve done anything different, but what I did learn from previous examples is that when it finally happens to you, just take the hard medicine and get it behind you…We’ve had two bad quarters and two bad quarters in the context of a company, it’s frustrating for all the investors, it’s difficult on all the employees. This is not confidence inspiring. It was obvious that the Etherum merge would affect the bottom line in a big way. Why this professed ignorance? Does it have to do with the fact that to admit that it was visible a mile away would have been to admit the deep reliance the company had come to have on the short-term Ethereum mining boom?

AceJohnny2 4y ago
As the article says, the timing on the Ethereum dropping proof-of-work was shorter than Nvidia's production pipeline.
vineyardmike 4y ago
I think we forget that Silicon manufacturing is planned a lot farther out than Silicon shopping. They were likely trying to make TSMC purchase orders in the start of the pandemic, before a crypto boom. They also tried to handicap their GPUs wrt crypto. They likely didn’t expect the absolute shit show of a chip shortage (because who predicted or understood the pandemic early). The rest of the market was desperate, and they probably expected it to be more robust than it ended up being. The merge would have been so far away at the time that they wouldn’t predict if it would happen at all nevermind when.
opportune 4y ago
I think Huang does not want to draw investors’ attention to crypto because he doesn’t want people to equate Nvidia’s performance as a company with crypto performance. He doesn’t want Nvidia to just be a crypto company. At the same time, he also definitely wants to cash in on any future crypto booms, because they are lucrative. It is best for him to take a position that mostly ignores crypto. I think he legitimately doesn’t want crypto to be the future of Nvidia and doesn’t want to build for that use case, nor does he want to be financially reliant on it, but there is also no point in him talking shit or spreading doom about crypto when he can just shut up and still sell gpus.
- swalsh 4y ago
  Nvidia doesn't have a role in any future crypto boom, unless it's being used for analytics or AI. All modern chains use PoS.
  - kranke155 4y ago
    They do now but they didn’t just a few days ago.
  - Jorge1o1 4y ago
    Except for every single VR “metaverse” project (of which there are thousands) and all of the graphics hardware and software that goes into them.
- novolunt 4y ago
sophrocyne 4y ago
Couple of comments to this point suggest that it couldn't have been predicted since the official timing of the merge was only announced in 2022, and silicon supply chain requires planning in advance of that. But that point is ignorant of this truth - Proof-of-stake has been on the roadmap since ~2017 if not earlier.~ Edit: 2016 - Thanks friend! :) I think the reality is that the impact of Ethereum on Nvidia's business was not fully appreciated, and that 'veil of ignorance' may well have been intentional. They never truly served the crypto market directly (e.g., there wasn't really a "miner" line of cards), and as a result didn't do the due diligence to understand how those customers played into their business performance and strategy. Or they did, and just really underestimated the Ethereum devs on ever making the merge happen. But I lean towards the first. Either way, I think that with crypto in the rearview, I'm actually more confident in their leadership team. They seem better suited to gaming and AI.
- paulmd 4y ago
  > But that point is ignorant of this truth - Proof-of-stake has been on the roadmap since 2017 if not earlier. it's been on the roadmap since 2016. That's actually still a problem though, a perpetually-rolling-deadline is effectively worse than not having a deadline at all. Was NVIDIA just supposed to cut production for the last 6 years in anticipation of something that was continuously pushed back 6 months every 6 months? That's not a reasonable expectation.
  - sophrocyne 4y ago
    As an observer, I never got the sense that there were strong commitments being made on timelines until A) beacon chain was live (running in parallel), and B) testnets started getting merged successfully. The moment of Genesis for the beacon-chain started a clock that Nvidia should have been paying attention to, and I think would have given them plenty of time to foresee the present situation.
    - jonas21 4y ago
      Regardless of whether they foresaw it or not, what should they have done differently?
SkyMarshal 4y ago
Many folks in crypto expected those Ethereum-mining GPU farms to just switch to some other GPU-minable cryptocurrencies. It wasn't a certainty all those farms would just close up and dump their GPUs on the market en masse. But Fed interest rate policy hitting at the same time, driving down the crypto market across the board (and all other risk assets), may have unexpectedly changed the ROI calculation there and resulted in the dump.
- paulmd 4y ago
  > Many folks in crypto expected those Ethereum-mining GPU farms to just switch to some other GPU-minable cryptocurrencies. This was a pretty common take but if you did the math Ethereum had about 90% of the GPU-mining market (by hashrate) so it was obvious the profitability was going to tank on those other currencies as soon as Ethereum switched. In the long run yes, there will probably be another big spike in another cryptocurrency that starts another GPU boom. But it's not magic where one instantly springs up to absorb all the ethereum hardware at equivalent profitability. A GPU crash was inevitable regardless of the interest rate drop hitting at the same time.
- swalsh 4y ago
  I hoped there would be a rise in proof of work like chains, where in the work was something useful like training an AI or brute forcing a hard but useful problem. Like a SETI@Home, but paying crypto for successful solutions as opposed to relying on altruism.
  - asciimike 4y ago
    There are a few of these type of things, e.g. RNDR token (https://rendertoken.com https://rendertoken.com) and rent a flop (https://rentaflop.com https://rentaflop.com) in rendering, and golem (https://www.golem.network https://www.golem.network) and sonm (https://sonm.com/ https://sonm.com/) in the "general purpose computing on the blockchain"
  - omegalulw 4y ago
    It's hard to pull this off, if not impossible. A key attribute of proof of work systems is that the difficulty should be dynamically adjustable and that everyone has perfect consensus on what "work" is. Doing meaningful work, while admirable, puts the owners of those projects in control of defining "work" and adjusting difficulty, i.e., people in the loop. That's not trustworthy from a currency POV, no matter who the people are.
varelse 4y ago
colechristensen 4y ago
I think it's more like there are so many games at play as CEO in that position that anything but vague denial would be far more trouble than it's worth. Anything you say is going to attract a lot of criticism so the only thing you can say is the least damaging one. In other words, most public statements are mostly nonsense engineered for response and have only a casual association with the truth.
KaoruAoiShiho 4y ago
It was sudden and couldn't have been predicted. Ethereum ended PoW just this month but the GPU crash was 7 months ago. In reality the PoW transition had nothing to do with the GPU crash, it was the end of WFH and the crypto decline caused by the russian invasion that resulted in the GPU crash.
- mccorrinall 4y ago
  > crypto decline caused by the russian invasion What? One of the biggest recent decline in crypto happened when LUNA foundation dumped multiple billions as BTC in order to keep terra stable (didn’t work out). The other dump is caused because borrowing money for leverage won’t be as cheap as it was for at least the next 4 years (taking bloomberg projections of Fed rates here). How is the invasion related to the dump at all?
  - KaoruAoiShiho 4y ago
    These are all caused by general asset declines due to the russian invasion, inflation spiking, and fears of fed reaction. General asset declines put pressure on crypto whose more dramatic moments is really traced back to the russian invasion.
modeless 4y ago
They have consistently underestimated the effects of crypto, it's been screwing up their demand forecasts for a long time. I think what happened was they had all these efforts to prevent miners from buying cards so gamers could buy them instead, and they thought they were successful. So they attributed strong demand to gaming, but they were actually failing and miners were still buying all the cards. I don't know why they thought they were successful...
deleted 4y ago
[deleted]
ashafer 4y ago
I'm guessing it is less about proof of stake and more about the fact that all of crypto is in the gutter and it's not as economical to mine anymore. I would guess that is the big core issue that is enhanced by things like proof of stake. Kind of a perfect storm when paired with inventory issues and crazy inflation. I think that storm is what he is saying they couldn't have predicted.

by yuan43 4y ago

AceJohnny2 4y ago

As the article says, the timing on the Ethereum dropping proof-of-work was shorter than Nvidia's production pipeline.

vineyardmike 4y ago

I think we forget that Silicon manufacturing is planned a lot farther out than Silicon shopping. They were likely trying to make TSMC purchase orders in the start of the pandemic, before a crypto boom. They also tried to handicap their GPUs wrt crypto. They likely didn’t expect the absolute shit show of a chip shortage (because who predicted or understood the pandemic early). The rest of the market was desperate, and they probably expected it to be more robust than it ended up being. The merge would have been so far away at the time that they wouldn’t predict if it would happen at all nevermind when.

opportune 4y ago

I think Huang does not want to draw investors’ attention to crypto because he doesn’t want people to equate Nvidia’s performance as a company with crypto performance. He doesn’t want Nvidia to just be a crypto company. At the same time, he also definitely wants to cash in on any future crypto booms, because they are lucrative. It is best for him to take a position that mostly ignores crypto. I think he legitimately doesn’t want crypto to be the future of Nvidia and doesn’t want to build for that use case, nor does he want to be financially reliant on it, but there is also no point in him talking shit or spreading doom about crypto when he can just shut up and still sell gpus.

swalsh 4y ago
Nvidia doesn't have a role in any future crypto boom, unless it's being used for analytics or AI. All modern chains use PoS.
- kranke155 4y ago
  They do now but they didn’t just a few days ago.
- Jorge1o1 4y ago
  Except for every single VR “metaverse” project (of which there are thousands) and all of the graphics hardware and software that goes into them.
novolunt 4y ago

sophrocyne 4y ago

Couple of comments to this point suggest that it couldn't have been predicted since the official timing of the merge was only announced in 2022, and silicon supply chain requires planning in advance of that. But that point is ignorant of this truth - Proof-of-stake has been on the roadmap since ~2017 if not earlier.~ Edit: 2016 - Thanks friend! :) I think the reality is that the impact of Ethereum on Nvidia's business was not fully appreciated, and that 'veil of ignorance' may well have been intentional. They never truly served the crypto market directly (e.g., there wasn't really a "miner" line of cards), and as a result didn't do the due diligence to understand how those customers played into their business performance and strategy. Or they did, and just really underestimated the Ethereum devs on ever making the merge happen. But I lean towards the first. Either way, I think that with crypto in the rearview, I'm actually more confident in their leadership team. They seem better suited to gaming and AI.

paulmd 4y ago
> But that point is ignorant of this truth - Proof-of-stake has been on the roadmap since 2017 if not earlier. it's been on the roadmap since 2016. That's actually still a problem though, a perpetually-rolling-deadline is effectively worse than not having a deadline at all. Was NVIDIA just supposed to cut production for the last 6 years in anticipation of something that was continuously pushed back 6 months every 6 months? That's not a reasonable expectation.
- sophrocyne 4y ago
  As an observer, I never got the sense that there were strong commitments being made on timelines until A) beacon chain was live (running in parallel), and B) testnets started getting merged successfully. The moment of Genesis for the beacon-chain started a clock that Nvidia should have been paying attention to, and I think would have given them plenty of time to foresee the present situation.
  - jonas21 4y ago
    Regardless of whether they foresaw it or not, what should they have done differently?

SkyMarshal 4y ago

Many folks in crypto expected those Ethereum-mining GPU farms to just switch to some other GPU-minable cryptocurrencies. It wasn't a certainty all those farms would just close up and dump their GPUs on the market en masse. But Fed interest rate policy hitting at the same time, driving down the crypto market across the board (and all other risk assets), may have unexpectedly changed the ROI calculation there and resulted in the dump.

paulmd 4y ago
> Many folks in crypto expected those Ethereum-mining GPU farms to just switch to some other GPU-minable cryptocurrencies. This was a pretty common take but if you did the math Ethereum had about 90% of the GPU-mining market (by hashrate) so it was obvious the profitability was going to tank on those other currencies as soon as Ethereum switched. In the long run yes, there will probably be another big spike in another cryptocurrency that starts another GPU boom. But it's not magic where one instantly springs up to absorb all the ethereum hardware at equivalent profitability. A GPU crash was inevitable regardless of the interest rate drop hitting at the same time.
swalsh 4y ago
I hoped there would be a rise in proof of work like chains, where in the work was something useful like training an AI or brute forcing a hard but useful problem. Like a SETI@Home, but paying crypto for successful solutions as opposed to relying on altruism.
- asciimike 4y ago
  There are a few of these type of things, e.g. RNDR token (https://rendertoken.com https://rendertoken.com) and rent a flop (https://rentaflop.com https://rentaflop.com) in rendering, and golem (https://www.golem.network https://www.golem.network) and sonm (https://sonm.com/ https://sonm.com/) in the "general purpose computing on the blockchain"
- omegalulw 4y ago
  It's hard to pull this off, if not impossible. A key attribute of proof of work systems is that the difficulty should be dynamically adjustable and that everyone has perfect consensus on what "work" is. Doing meaningful work, while admirable, puts the owners of those projects in control of defining "work" and adjusting difficulty, i.e., people in the loop. That's not trustworthy from a currency POV, no matter who the people are.

varelse 4y ago

colechristensen 4y ago

I think it's more like there are so many games at play as CEO in that position that anything but vague denial would be far more trouble than it's worth. Anything you say is going to attract a lot of criticism so the only thing you can say is the least damaging one. In other words, most public statements are mostly nonsense engineered for response and have only a casual association with the truth.

KaoruAoiShiho 4y ago

It was sudden and couldn't have been predicted. Ethereum ended PoW just this month but the GPU crash was 7 months ago. In reality the PoW transition had nothing to do with the GPU crash, it was the end of WFH and the crypto decline caused by the russian invasion that resulted in the GPU crash.

mccorrinall 4y ago
> crypto decline caused by the russian invasion What? One of the biggest recent decline in crypto happened when LUNA foundation dumped multiple billions as BTC in order to keep terra stable (didn’t work out). The other dump is caused because borrowing money for leverage won’t be as cheap as it was for at least the next 4 years (taking bloomberg projections of Fed rates here). How is the invasion related to the dump at all?
- KaoruAoiShiho 4y ago
  These are all caused by general asset declines due to the russian invasion, inflation spiking, and fears of fed reaction. General asset declines put pressure on crypto whose more dramatic moments is really traced back to the russian invasion.

modeless 4y ago

They have consistently underestimated the effects of crypto, it's been screwing up their demand forecasts for a long time. I think what happened was they had all these efforts to prevent miners from buying cards so gamers could buy them instead, and they thought they were successful. So they attributed strong demand to gaming, but they were actually failing and miners were still buying all the cards. I don't know why they thought they were successful...

deleted 4y ago

[deleted]

ashafer 4y ago

I'm guessing it is less about proof of stake and more about the fact that all of crypto is in the gutter and it's not as economical to mine anymore. I would guess that is the big core issue that is enhanced by things like proof of stake. Kind of a perfect storm when paired with inventory issues and crazy inflation. I think that storm is what he is saying they couldn't have predicted.