This is because graphics card manufacturers are reporting weaker financials due to lower demand as a result of Ethereum’s transition from proof-of work mining.
EVGA the largest manufacturer of graphics card add in boards, announced late Friday it would be quitting the board business because of the dire financial outlook for the sector following the Ethereum Merge and the “mistreatment” by Nvidia.
A spokesperson for stated that EVGA would not be carrying the next-generation graphics cards. “EVGA will continue supporting the current generation products. EVGA will continue to support the current generation products. EVGA is committed our customers and will continue offering sales and support for the current line of products.”
Graphics cards make up 80% of EVGA’s revenue
Nvidia, AMD, and Gigabyte design the GPUs that are on the board. However, the actual card that fits into a computer’s motherboard is made by third-parties like EVGA and Asus. This is to seperate low-margin design business and the high-margin manufacturing of actual chips.
Andrew Han, CEO of EVGA, stated that graphics cards make up 80% of the company’s revenue, but power supplies are 300% more profitable. Han stated that EVGA would not entertain the idea to work with Intel or AMD because of the inherent difficulties with their business model.
GamersNexus was also informed by Han that Nvidia would often mistreat the company, despite holding 40% of North American Nvidia card market share. Nvidia kept the company in the dark about prices until the very last minute. Nvidia also sold its first-party branded cards regularly to undercut partners like EVGA.
Data from Jon Peddie Research indicates that Nvidia’s margins are increasing year-over–year, largely due to the requirement for GPUs in data centres around world, but the margins for graphics cards add-in-board partner EVGA have slipped between 25% in 2000 and around 5% by 2022.
Other graphics card manufacturers look to struggle too
EVGA’s rivals are also experiencing a similar fate. According a report by Digitimes, a Taiwanese trade magazine covering the electronics industry, Asus and Gigabyte saw their July revenues drop month-over-month. Executives are bracing themselves for a weak second half in 2022 due to low demand for GPUs after Ethereum Merge, as well as weak demand for computers generally.
Asus shares are down 32% over the past six months, while Gigabyte is down 27% and MSI is down 12%.
Nvidia discouraged mining with its GPUs, but EVGA actively supported it by releasing drivers which bypass Nvidia’s software. This was to limit the utility these cards have for miners.
CoinDesk asked EVGA’s CEO for comments on the possible impact this might have had on their relationship with Nvidia.
Months after EVGA released its drivers to bypass Nvidia’s mining lock, Nvidia responded with a new set of drivers . These drivers were advertised as optimising performance in new games, but they also crippled Nvidia’s mining capabilities.
This back-and-forth is irrelevant: Proof of Work mining on Ethereum has become a thing of the passé.
Although there are many PoW protocols, the amount of hashrate generated by them is much lower than Ethereum’s. As CoinDesk reported previously, many miners have shut down and disposed of their GPUs.