Semiconductor companies NVIDIA Corp (NASDAQ:NVDA) and Advanced Micro Devices Inc (NASDAQ:AMD), known for their graphics processing units (GPUs), saw their stock prices benefiting from the boom in cryptocurrencies.
What Happened: These GPUs, originally designed for high-end video game graphics, have now become essential for computationally intensive applications such as data centers, artificial intelligence, and the creation of crypto assets.
Cryptography and blockchain creation require substantial computational power, making GPUs an ideal choice for these tasks. In 2018, as cryptocurrency prices soared, miners rushed to purchase GPUs, driving up the stock prices of Nvidia and AMD. GPUs played a vital role in the creation and management of crypto assets, to the extent that Nvidia even introduced a dedicated lineup of chips specifically for crypto mining in early 2021.
The Merge and Proof-of-Stake Approach
The Ethereum Foundation on September 15, 2022, completed “The Merge” process, which means Ethereum was switched from a Proof-of-Work (PoW) consensus mechanism to Proof-of-Stake (PoW).
With this development, the validation of new transaction blocks no longer relies on hardware mining, making the millions of high-end graphics cards previously used for this purpose redundant. Consequently, a large number of these ...