Nvidia and AMD could see graphics card demand slip amid Chinese crypto crackdown

The latest Chinese crackdown on crypto mining with the country’s borders could finally end the shortage of computer graphics cards but may cause demand and pricing pressures for some of the sector’s key players such as Nvidia Corp (NASDAQ:NVDA) and Advanced Micro Devices Inc (NASDAQ:AMD). A Digitimes report last Wednesday said Taiwanese PC parts maker ASRock had highlighted that the crackdown on crypto mining in China was behind a recent decline in the price of graphics cards, which are often used to mine cryptocurrency due to their ability to solve the complex mathematics required to verify blockchain transactions. READ: Bitcoin, Ethereum slump as China cracks down on crypto miners The explosion in the popularity of crypto mining sent demand for graphics cards soaring in 2021 as the rising price of Bitcoin and other digital currencies encouraged new and existing miners to snap up the components, causing price increases and leaving their usual clientele, video gamers, forking out higher sums. However, recent price falls in the crypto markets and the tightening of regulation in several countries means mining is now a more costly and less profitable enterprise, deflating demand and causing prices to reverse course. A the same time, miners are beginning to sell off their existing graphics cards, causing an influx into the pre-owned market. The effects of the glut are pronounced, with German computing firm ComputerBase noting that graphics card prices in Europe have fallen by as much as 50%, with a similar trend occurring in the US. While the easing of demand and lower prices will be good news for patient gamers, the situation could spell trouble for Nvidia and AMD if the non-crypto mining consumers are unable to match previous levels of demand. Investors seemed slightly doubtful about the outlook of the two firms in pre-market trading in New York on Monday, with Nvidia shares dropping 1% to US$737.25 while AMD was down 0.8% at US$83.95.