A Wall Street bank used bitcoin to prove that NVIDIA is better than its competitors (NVDA)

NVIDIA makes graphics processing units, also known as GPUs or graphics cards, and it competes with companies like AMD. When the average consumer shops for a GPU, they are primarily looking at performance versus price, trying to find the best bang for their buck.

That same measure doesn't work as well when you scale that comparison up to giant data centers. Performance and price are important, but hundreds or thousands of GPUs also draw hundreds or thousands of times the amount of power a consumer computer might. Power consumption becomes much more important at larger scales.

It's hard to determine how a collection of GPUs might draw power when you only have a couple of them lying around, but RBC analysts did their best, and that is where bitcoin comes in.

The whole bitcoin ecosystem relies on individual computers banding together to solve complex math problems. Anyone can use their computer to help solve these problems, a process known as mining. Mining tends to work faster when running on powerful GPUs.

RBC took this theory, strung together several GPUs, and tasked them with helping solve bitcoin's fancy math problems. It did this for NVIDIA and several competitors.

The idea is that the GPU-intensive process of mining bitcoin would force the GPUs into overtime and make them draw more power. It's as close of an approximation to a full-scale data center as RBC could put together. The firm called it a "thought experiment."

The result of the experiment favored NVIDIA processors over competitors like AMD, when comparing power consumption during bitcoin mining.

Companies building huge data centers are probably conducting their own research that more closely resembles what they would see at scale, but the RBC experiment serves to illustrate another reason NVIDIA holds the top spot for GPU makers.

As technology like machine learning, augmented reality and virtual reality pick up momentum, demand for GPUs will increase in order to run the graphics intensive technologies. If NVIDIA maintains its lead in power consumption, it could capture more of the growing demand, and see its shares rise in the process.

RBC has a price target of $150 for NVIDIA, about two dollars higher than where shares of the company opened on Tuesday.

A Wall Street bank used bitcoin to prove that NVIDIA is better than its competitors (NVDA)

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