Forget Bitcoin, This Hot Tech Stock Is A Better Buy

Bitcoin prices have enjoyed a meteoric growth over the past few months as institutional investors and large companies pour money into the digital currency, but the volatility of the cryptocurrency market has begun to rears its ugly head once again.

The price of bitcoin fell to just over $ 34,000 on January 13 after soaring to more than $ 40,500 on January 9. Such volatility makes cryptocurrencies like bitcoin a risky bet for investors looking for stable earnings. What’s more, some Wall Street companies worry about the value of cryptocurrencies going to zero.

However, it cannot be denied that cryptocurrencies are a hot asset class that many want a piece of. But is there a safer way to invest? The answer is yes, and that safer way is through NVIDIA (NASDAQ: NVDA) – a hot growth stock that has set the market on fire over the last year.

NVDA chart

NVDA data from YCharts

NVIDIA is already benefiting from the cryptocurrency boom

Cryptocurrency miners use graphics cards from the likes of NVIDIA to “mine” digital currencies. Demand related to cryptocurrency mining accounted for nearly 5% of NVIDIA’s top line three years ago, when cryptocurrency mining was booming. The good news for NVIDIA investors is that the recent surge in cryptocurrency prices has brought renewed demand from miners, especially since the launch of the company’s new Ampere cards.

Map containing dots of light on a black background

Image source: Getty Images.

The graphics specialist sold $ 175 million worth of GPUs (graphics processing units) to miners in the fiscal third quarter of 2021, according to RBC Capital Markets. While that would only account for 3.7% of the $ 4.73 billion in NVIDIA revenue generated during the quarter, the mining-related demand is good for the company in a larger way as demand excess supply has led to higher prices.

NVIDIA’s latest RTX 30 series graphics cards are in short supply thanks to the huge demand, from cryptocurrency gamers and miners. The cards are said to go out of stock as soon as they go on sale. As a result, NVIDIA now says GPU supply will continue to be slim through its fiscal first quarter, which ends in April.

NVIDIA also highlights that sales of its latest Ampere RTX 30 cards track twice the rate of previous RTX 20 series cards. This combination of incredible demand and short supply has led to an increase in GPU prices.

Big gains ahead

Cryptocurrency mining will have a twofold impact on NVIDIA’s business – one in the form of increasing demand from miners, the other in the form of higher prices. What’s more, the company could consider making bespoke crypto mining cards if it sees significant demand from miners. NVIDIA says it is not sure how many of its sales are coming from that market at the moment.

But the scarcity of graphics cards and the efficiency of the new RTX cards for digital silver mining indicate that demand for mining could be strong. An Ethereum miner can reportedly recover its investment in an RTX 3080 in just 233 days, a big improvement over the RTX 2080, which reportedly took two and a half years to become profitable.

Additionally, RBC says recent technical changes in Ethereum mining will force miners to upgrade to new hardware. So NVIDIA could gain a lot from the cryptocurrency market in 2021.

Throw in the basic catalysts on which NVIDIA sits – data centers and video games – and it becomes clear why buying into the cryptocurrency lust through the chip maker would be a better alternative to buying cryptocurrencies directly . NVIDIA has a diversified business, and will help investors avoid the speculative nature of the cryptocurrency market.