Chipmaker Nvidia Corporation reported revenue of $3.18 billion in the third quarter, up 21% from the $2.64 billion it posted during the same period last year.
This fell short, however, of the $3.24 billion expected by analysts, according to Thomson Reuters’ Refinitiv, and CNBC pointed out that the company’s stock dropped 19% after the release of its latest figures.
Nvidia CEO Jensen Huang said, “Our near-term results reflect excess channel inventory post the crypto-currency boom, which will be corrected. Our market position and growth opportunities are stronger than ever.”
CNBC cited an analysis by Susquehanna International Group, LLP, stating that the graphics processing units that Nvidia produces are at present not profitable for mining cryptocurrencies, which reflects the decline in many cryptocurrencies’ prices since last year.
The drop in sales of chips for mining has been alluded to by Nvidia before, with CFO Colette Kress saying last August that the company was eventually going to have “essentially no cryptocurrency as we move forward.”
Original equipment manufacturer and intellectual property revenue from July to September was down 23% year on year, which Kress said was “due to the absence of cryptocurrency mining.”
Huang noted that that it was the datacenter platforms operations that were reaching “record revenues.” He also said, “Our introduction of Turing GPUs is a giant leap for computer graphics and AI, bringing the magic of real-time ray tracing to games and the biggest generational performance improvements we have ever delivered.”
Net income for the third quarter was $1.23 billion, a 47% increase year on year. Diluted earnings per share according to Generally Accepted Accounting Principles (GAAP) was $1.97, up 48% from the same period last year. Non-GAAP diluted earnings per share was $1.84, above the $1.71 expected by Refinitiv.
For the fourth quarter, Nvidia foresaw revenue of $2.70 billion, “plus or minus 2 percent,” with operating expenses of $915 million. Refinitiv is estimating $3.4 billion in revenue for this period.
Venture Beat’s Dean Takahashi quoted Patrick Moorhead of Moor Insights & Strategy, who in an e-mail said “Nvidia had a really good Q3/19, revenue and profit-wise… Nvidia is saying there was a lot of Pascal inventory, likely due to over-ordering during the crypto-boom where gaming customers were ordering two to three times of what they needed to assure supply… I have no question that is a short-term [blip] that will be quickly corrected.”
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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Toronto-listed Hut 8 Mining Corp. reported a cryptocurrency mining profit of CAD8.9 million ($6.7 million), and revenue of CAD17.7 million ($13.4 million) in the third quarter.
The company, which claims to be the largest public cryptocurrency mining company by operational capacity and market capitalization, said in its report that it had a mining profit margin of 51%, with site operating costs amounting to CAD8.7 million ($6.6 million).
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was CAD7.2 million ($5.5 million). It had a net loss of CAD11.4 million ($8.6 million), or CAD0.14 ($0.11) per share. Operations made for 1,978 BTC mined, at a cost of $3,394 per coin, “making Hut 8 among the lowest-cost miners of [BTC] in the world,” it said.
According to Hut 8, the third quarter was the first period impacted by operations at its facility in Medicine Hat, Alberta, which led to the company’s largest revenue for a single quarter. “Efficiency of the ASIC chips used to mine [BTC] is expected to increase during the colder months in Alberta, leading to improved performance in Q4 when compared to Q3,” the miner said. The Medicine Hat facility has 56 BlockBox datacenters operating at a maximum of 67.2 megawatts (MW) and 500 Petahashes per second.
It also has a facility in Drumheller, Alberta, with maximum operating power capacity of 18.7 MW.
Revenue for the first nine months of the year was CAD36.4 million, with mining profit of CAD22.7 million ($17.2 million), a 62% profit margin. Adjusted EBITDA for January to September was CAD18.7 million ($14.2 million).
Hut 8 explained the lower margin for the third quarter as a result of increased competition from other miners, and to a lesser degree, higher power costs.
Hut 8 CEO Andrew Kiguel noted that the heat wave during the summer in Alberta led to increased prices of electricity. “We are actively managing our exposure to market prices through a number of different means. Despite this, Hut 8 achieved record revenue for Q3 and strong overall margins.”
According to the company, since it began mining operations in December of last year, it has mined more than 4,200 BTC.
Hut 8 has an exclusive arrangement with the Bitfury Group, which allows the miner “to construct, optimize and manage data centres in low-cost and attractive jurisdictions.”
Bloomberg recently reported that Bitfury is considering ways to raise funds, including an initial public offering (IPO), which if it takes place in Europe, would be the largest listing in the continent, and would reportedly increase the company’s value to $3 billion-$5 billion in the next couple of years.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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The Finance commission of France’s lower house of Parliament is endorsing a proposal to lower taxes on sales from cryptocurrencies, according to a Reuters report.
When passed, the measure, adopted as an amendment to the country’s 2019 budget bill, will reduce the current tax rate on cryptocurrencies by 6.2%, from the current rate of 36.2% to a flat 30%.
The capital gains tax rate on digital assets had previously been at 45%, with tax officials putting them in the same classification as commercial and industrial property in 2014, but this was lowered last April to 19%. On top of the capital gains tax, however, is a 17.2% “social contributions” levy. Gains from cryptocurrency mining continue to be taxed at 45%, plus social contributions.
The proposed tax cut, along with the 2019 budget, is expected to take effect in January next year.
Other countries, in Europe and elsewhere, have sought tax reforms in connection with cryptocurrencies, if not to lower rates, then to at least provide for greater regulatory clarity. In Poland, a bill is now pending that would classify fiat proceeds from the sale of cryptocurrencies as individual or corporate income, while subjecting sales from cryptocurrency-related equipment and other property to capital gains tax. In the bill, cryptocurrency-to-cryptocurrency transactions are not taxed.
In Australia, the Australian Tax Office (ATO) has maintained a position that cryptocurrencies are assets subject to capital gains tax, like sales from real estate.
In India, an 18% tax on cryptocurrency sales has reportedly been studied by the Central Board of Indirect Taxes and Customs.
In South Korea, cryptocurrency exchanges have been subject to taxes similar to small and medium enterprises (SMEs), who receive 50%-100% tax cuts for their first five years, and are taxed from 5%-30% beyond that. However, starting around the end of the year, these companies will no longer enjoy such a classification, and taxes are expected to increase.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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Cryptocurrency mining is all about performance—that is, getting maximum processing power (‘hash rate’) for every watt of energy used. Since that has a direct effect on profitability, just as ‘search engine optimizer’ was once a new job to help companies win attention on Google, now there are crypto optimizers too.
And they’re in great demand, according to Kristy-Leigh Mineham, an expert in the field. Speaking to me from Seattle, Washington, she explained that both the hardware and the software in a mining rig can be tweaked.
Working for many of the giants in the industry since 2010, Kristy-Leigh examines a rig and makes many small improvements that add up to better performance: “I’m good at looking for bottlenecks and smoothing them out—or removing them entirely,” she says.
The first job is to look at the software: “software optimization can occur at a number of levels—there’s the design level, which is all about your architecture—what hardware is the software working with? What language are you using? Then there’s the algorithmic level—my favorite—where it’s all about making the best use of the available hardware. You’d be surprised at how awful most implementations are.”
It gets more technical, the deeper into the software you go: “At the source code level, you can go in and refactor the code all the way down to the compile and assembly level, where you take what the source code was translated into and make sure things didn’t get lost in translation. And if they did? Correct it by hand, in the machine’s native language.”
It’s like having a team of engineers working on a racing car at the pit-stop: Kristy-Leigh will go in with her digital wrenches and spanners, fixing problems. Hardware optimization is different. “In hardware, you’re limited by what you get from the factory. The best you can do is tune the frequency of each individual chip. In some cases, you can do circuit board modifications to increase stability and performance. Very rarely, you can replace the entire software layer that controls it.”
It’s a role Kristy-Leigh seems born for. From a young age, she say, she’s been breaking things in order to improve them. “I was mostly into video games early on. With a hex editor, you could see a live view of a video game’s memory and manipulate bytes in real time, which meant you could see the effects instantly. And you could also set breakpoints, which let you overwrite preprogrammed game logic. Video games taught me a ton about basic command lines, Boolean algebra, binary formats, networking basics, and even cryptography. I guess that means I’ve been a hacker from the start of my life—if you take the original definition,” she laughs.
Her love of secrets led to an interest in cryptography and from there, she was naturally drawn to the ideas behind the original Satoshi white paper when it was dropped into an online chat room she frequented. “I thought, here’s the kind of technology that’s really going to disrupt the world.”
Armed with her limited knowledge, Kristy-Leigh started mining Bitcoin—chasing high scores in hashrate rather than gaming points. When she’d maximized the hashrate numbers, she went into the source code, just as she’d done with video games: “I think I shaved a few instructions down into one—and then I was like ‘oh, hang on, that actually changed something. It’s faster now’. It was just like a video game. I was hooked.”
She started doing odd bits of contractor work under many pseudonyms, often getting paid in Bitcoin—in numbers that looked impressive but at the time amounted to cents. Of course, having a stake in Bitcoin at those values turned out to be a good investment, as long as you hung on to most of it. And yes, Kristy-Leigh admits, she did. It’s provided the initial investment for her own startup companies and worldwide travels.
Today, there’s growing demand for people who understand crypto technology as intimately as Kristy-Leigh does. “There are more and more coins out there, every day, and each of them requires fine-tuning and tweaking,” she says.
Kristy-Leigh is bullish about the long-term prospects for crypto and blockchain technology, but believes it will only come of age when it’s been embedded in three big sectors: banks, ecommerce, and gaming.
“Banks are easy—the promise of more efficient, cheaper transactions makes blockchain a natural. But the banks that are already pursuing it are less established than their more conservative counterparts.” Once a big bank in the States, Canada or the United Kingdom begins to adopt blockchain, Kristy-Leigh believes, it won’t affect the user experience but will be a big change behind the scenes, resulting in a sharp decrease in fees.
“Then, we’ve got ecommerce. When online retailers start to cut out the fees now charged for handling and transacting, we’re going to see the true power of blockchain hitting the biggest markets. And smart contracts will help retailers, too, with inventory and delivery tracking and with warranties and services. Smart contracts are going to revolutionize the retail space.”
Finally, perhaps more surprisingly, there’s gaming: “Gaming has become a critical part of everyday life for all ages. Every year more resources are put into cyber protection and anti-cheating mechanisms. If you could use the blockchain to track and verify virtual assets in an MMO [massive multiplayer online game], you’d cut down on a lot of unnecessary overhead and be able to track purchases and refute chargebacks in a pretty streamlined manner—instead of the current system that costs Apple alone millions of dollars each month.”
More stable cryptocurrency prices will help speed up adoption. Kristy-Leigh says their volatility has been like “stocks on steroids”, but notes that values are already less volatile than they have been. “We’ve got more historical data to play with now. We know that in the last financial quarter of the year, crypto prices swell. Christmas is a big facilitator of that.”
When it comes to the inevitable question about being a woman in the field, Kristy-Leigh laughs. “It’s never affected me,” she says. “The only people who ever cared about my gender were people who didn’t care about my code. In the space I come from, people only judge you from the quality of your commits*, not the quality of your… sorry, pardon my Australian!”
* In software development, a commit is the making permanent of a set of proposed changes.
Kristy-Leigh Mineham will be speaking at the CoinGeek Week Conference in London on Friday November 30, along with other industry leaders.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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Financial services giant Fidelity Investments has launched its cryptocurrency service for institutional investors.
The new company, Fidelity Digital Asset Services, LLC, will be providing cryptocurrency trading as well as custody services, according to Fidelity.
Fidelity Investments Chairman and CEO Abigail Johnson said, “We expect to continue investing and experimenting, over the long-term, with ways to make this emerging asset class easier for our clients to understand and use.”
Fidelity Digital Asset Services head Tom Jessop said that his team had been exploring blockchain for years. The company began researching with its Blockchain Incubator in 2013, experimenting with mining, and allowing clients to view their Coinbase exchange accounts on Fidelity.com. It had also launched Fidelity Charitable in 2015, which received $69 million in cryptocurrency donations in 2017.
“The creation of Fidelity Digital Assets is the first step in a long-term vision to create a full-service enterprise-grade platform for digital assets,” Jessop said.
He noted that there remained a lack of support for institutions, even as there are already numerous cryptocurrency-related services available.
According to the Fidelity Global Institutional Investor Survey conducted this year in 25 countries, 70% of institutional investors saw new asset classes coming about with the increased use of blockchain and other technologies.
“Whether it’s the rising popularity as a store of value or relative non-correlation to the broader market, the potential to power lower-cost global payments, or the emergence of protocols that could power new industries, institutional investors are interested in engaging with this new asset class,” the Fidelity Investments statement read.
Aside from digital asset custody and trade execution services, Fidelity Digital Asset Services will also offer client support where investors “will have access to a dedicated team of client service specialists, from onboarding throughout the entire relationship with the company.”
Fidelity Investments, a 70-year-old company, manages $7.2 trillion in assets worldwide, and employs 40,000 people. The company first announced its intention to enter the cryptocurrency market last June.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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