Mining Players Nvidia And Samsung Still In Record Profit Despite Crypto Weakness

Tech giant Samsung expects overall profits to continue into Q4 despite a noted glut on the market for memory components used in cryptocurrency mining, among other uses. This comes after a collapse in demand for crypto-specific mining gear earlier this year, as prices for crypto-assets plunged.

Prices for Dynamic Random Access Memory, or DRAM, a key component in the production of graphics cards, have probably peaked, says a source quoted by the Financial Times (FT) of London. Prices for DRAM have already risen 48% from the start of the year and may rise further in Q3, but are expected to fall starting in Q4.

Samsung is expected to cut production of the chips to stabilize any fall in price. Micron, the large US manufacturer of DRAM chips, faced a “plunge” in its stock price in Q3 as it struggled to move its DRAM stock.

Nvidia, known for manufacturing graphics cards, has seen record profits despite declining demand for cryptocurrency miners. A fifth of Nvidia’s revenue now comes from producing “modified graphics chips” for data centers, which support the use of AI to process voice and facial recognition data, according to Bloomberg.

“China imports more semiconductors than crude oil”

It is not perfectly clear how much this general decline in DRAM prices has to do with the overall weak demand for graphics card. A Chinese official recently intimated that the DRAM market, which is “highly concentrated” between two Korean companies (Samsung and SK Hynix) and one American company (Micron), could be suffering from “price fixing”.

China, aspiring in future to be DRAM self-sufficient, is now heavily dependant upon imports to satisfy its DRAM need. Although Chinese production of the chips has started to pick up, “their production capacities are not high, they are not expected to become viable competitors for [foreign companies] in terms of volumes, production efficiencies, or performance any time soon.”

 

Blockchain & Real Estate: How Tokenization May Be a Game Changer for Investors and Owners

The real estate market represents one of the oldest and most significant investment classes. Real estate investments yield competitive returns and are particularly effective hedges against inflation, however, there have been several persistent barriers to entry, including the high cost of entry and low liquidity.

With cryptoassets emerging as a new asset class, their underlying technology - blockchain networks - have evolved to not only serve transactional systems but also confer, hold and transfer value in general.

As the industry and technology continue to develop, there is considerable room in merging the old with the new, and few areas hold potential equal to the tokenization of real estate.

Tokenization, as the name suggests, is the representation of an asset or equity, in token equivalents, which can be fractionally divided and owned.

A tokenized property would be akin to a real estate investment trust (REIT), but much more flexible and with very little middlemen fees.

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Unparalleled liquidity

Tokenized equities and real estate will witness unparalleled liquidity, given how the ease and secure settlement of cross-border transfers in tokens can take investment pools truly global.

Fractional ownership/Low cost of entry

Since tokens support fractional ownership, they considerably lower the cost of entry, further opening up the investor pool and unlocking developing regions and economies around the world.

Efficient administration/No middlemen

Tokenized securities can be further programmed for efficient administration - this is done via the use of smart contracts, which can easily send out dividends and support other functions, such as voting rights. Moreover, since all of these activities are recorded on the blockchain, management overheads are significantly reduced, middlemen are removed from the picture and costs are lowered for both investors and issuers.

Increased transparenc

Not only are blockchain networks secure, but they are also immutable and allow for increased transparency, where every transaction and value transfer is recorded on a ledger. Access to the ledger can be permissioned if required, and overall, blockchain implementations are flexible.

Current challenges to tokenization of real estate

While the prospect of tokenized real estate is quite attractive, its implementation is not without challenges.

First, there is a need for improved security practices and general awareness around the custody of digital tokens. Time and again, we see exchanges getting hacked and/or cryptocurrency owners losing their holdings due to security lapses as simple as phishing attacks and keyloggers.

Until institutional-grade custody solutions and exchanges become mainstream, the dream of tokenized real estate will be difficult to realize.

While there are several reputable platforms, such as Polymath and Swarm, they only take care of the technology end of tokenization. Before there can be any meaningful adoption, regulatory developments need to be made. Even when tokenized, real estate tokens fall under securities law, and compliance procedures need to be followed. Unfortunately, there is the feeling of a lack of clarity surrounding digital securities, and presently, industry stakeholders have adopted a “wait and watch” approach.

Promising ventures in the real estate space

Given the benefits of tokenizing securities (particularly the reduced buy-in price and increased liquidity in real estate), it is all but certain that the future will see a larger-scale adoption of digital securities, and it will be better for the industry that it happens when everyone is ready for it.

About the author:

Joe DiPasquale is CEO of BitBull Capital and has unique insights into crypto fund investment styles, diligence, and deals. Previously, he worked in investment management, investment banking, technology, and strategy consulting at Deutsche Bank, Bain, and McKinsey. Joe completed his BA at Harvard University and MBA at Stanford University.

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