NVIDIA (NASDAQ:NVDA) recently announced a trendy new product: a cryptocurrency mining processor (CMP). These chips are specifically designed for mining Ethereum (CRYPTO:ETH), and the first shipments are expected to launch later this month.
This move has several big implications for NVIDIA’s business. Here’s what investors should know.
What does it mean to mine Ethereum?
Every time someone sends or receives an Ethereum token, a transaction occurs. And these transactions are processed in batches known as blocks. For example, if I buy an Ethereum token right now, that transaction will be grouped alongside other transactions until a block is formed, at which point that block can be mined. Specifically, miners use powerful computers to discover the cryptographic hash (i.e. solve the math problem) that validates the block.
Once the block is validated, it is added to the chain of all previous blocks in the Ethereum network — that’s where the term blockchain originates. While blockchain technology has applications outside of cryptocurrency, it was first invented by the unknown creator of Bitcoin (CRYPTO:BTC). And since a cryptocurrency’s blockchain contains a record of all past transactions, it is the equivalent of a