Graphics-chip maker NVIDIA (NVDA 6.98%) recently posted second-quarter results that handily topped analyst expectations. Revenue and earnings per share increased 40% and 91%, respectively, from a year ago. Perhaps most impressive about those numbers, though, is that NVIDIA pulled them off with little help from the developing cryptocurrency industry.

What goes up must come down

Cryptocurrencies had an epic year in 2017, with many digital currencies gaining value by several thousand percent. The boom in price sent many techies scurrying to set up their own cryptocurrency mining operations -- the transaction validation process in a cryptocurrency network. For many crypto assets, graphics processing units (GPUs) like those manufactured by NVIDIA are key to the mining process.

The mad dash to "mine" digital money was a boon for NVIDIA and other graphics-card makers, creating a big new outlet for sales over the course of just a few quarters. Demand got so strong that supply tightened to the point that graphics card prices for video gaming also rose sharply. In spite of cryptocurrency values cooling off, that trend lasted through the first quarter of 2018, as NVIDIA said demand for its GPUs due to mining was stronger than expected. Total revenue directly tied to the movement was $289 million during the period.

It all came to a screeching halt in the second quarter, though. CFO Colette Kress had this to say: "Our revenue outlook had anticipated cryptocurrency-specific products declining to approximately $100 million, while actual crypto-specific product revenue was $18 million, and we now expect a negligible contribution going forward."

Turning over a new leaf

To be fair, NVIDIA has been warning that its boost from cryptocurrency mining was not sustainable. During the first-quarter earnings call, Kress said the company expected second-quarter sales to be a third of the $289 million during the first three months of the year. Softening crypto asset pricing was an outsized reason why, but the emergence of specialized chips for mining -- Chinese start-up Bitmain being just one maker of them -- was also inevitably going to take a bite out of the bloated segment.

The $18 million actual result in the second quarter was a bigger drop than investors may have been prepared for and it's a sign that the digital mining craze has come to a dramatic conclusion. NVIDIA said that it will completely leave any revenue expectations from it out of its guidance.

Someone holding an illustrated rendition of digital currency.

Image source: Getty Images.

That doesn't mean cryptocurrencies are dead, nor does it mean NVIDIA won't see benefit from them down the road. However, management is pulling the bandage off fast to wean investors off of thinking about the business segment. It was never a primary business line in the first place. Even during the first quarter of 2018, GPUs sold to miners accounted for only 9% of total revenue.

With cryptocurrency numbers now out of the way, NVIDIA gets to redirect attention toward its more sustainable growth initiatives, including AI, data centers, autonomous autos, and next-generation graphics processing using ray tracing technology -- a light rendering technique that makes cinematic-quality gaming experiences possible.

As for the third-quarter forecast, while it was weaker than hoped for, management still forecast a new revenue record of $3.25 billion plus or minus 2%. That would be a 23% increase over last year, excluding any negligible income from cryptocurrency. Thus, while NVIDIA implied it would still do some work in the digital currency space, the company just stuck a proverbial pin in the digital mining bubble.