DeepSeek's Impact on AI, Nvidia & Mining

DeepSeek, the fruit of Chinese artificial intelligence development, has sent shockwaves through the artificial intelligence and cryptocurrency market, creating a grey area for Nvidia and cryptocurrency miners' stocks.

DeepSeek, the fruit of China's artificial intelligence development, has sent shockwaves through the artificial intelligence and cryptocurrency market, creating a grey area for Nvidia and cryptocurrency miners' stocks.

Created by mutual funds with incredibly limited resources, DeepSeek has made exceptional progress, creating a stir in the digital world. This has led investors to rethink whether or not to invest in artificial intelligence hardware.

The Rise of DeepSeek - The History of Artificial Intelligence Driven by the Chinese

DeepSeek, a recently evolved artificial intelligence protocol, is causing upheaval in the market. DeepSeek has shown that significant financial support is by no means indispensable to achieve revolutionary results in the field of artificial intelligence. This AI protocol has challenged the long-standing notion that expensive hardware investments are needed to develop artificial intelligence.

Traditionally, artificial intelligence research has been driven by the belief that constant computing power is the key to unlocking the true decision-making potential of AI. This has led to a strong emphasis on the development of robust hardware, often at high cost. DeepSeek, however, has turned this view on its head by demonstrating that alternative approaches can be just as effective.

The secret of DeepSeek's success lies in its innovative software architecture and optimised algorithms. By leveraging existing hardware and developing software that can utilise these resources efficiently, DeepSeek has achieved levels of performance comparable to AI architectures supported by massive computational resources.

Nvidia and Others Must Address Uncertainty

The aftermath of DeepSeek has caused tremors in the artificial intelligence and cryptocurrency industries. Investors are now questioning the practicality of large-scale investments in artificial intelligence hardware, as DeepSeek is able to achieve significant results with potentially lower resource requirements. This recently emerged vulnerability has led to a decline in the value of AI-focused stocks.

Nvidia, a leader in AI development, has been particularly affected. The company's share price has plummeted dramatically in recent weeks as investors re-evaluate the future of AI hardware. Nvidia reported record revenues last November and recently predicted that AI agents would become a billion-dollar industry.

Nvidia share price, source Google Finance

The emergence of Deepseek has not only hurt Nvidia. Cryptocurrency miner stocks such as RIOT and Marathon were also hit hard. Marathon and RIOT are organisations that specialise in providing computing power for cryptocurrency mining and make extensive use of Nvidia hardware.

Marathon share price, source Google Finance

The two companies had performed well so far, buying huge amounts of Bitcoin in the past month. Cipher Mining, another publicly traded company that runs server farms for Bitcoin mining, saw its shares plummet by 25% today.

With the release of DeepSeek, technology journalist Ed Zitron said: 'The artificial intelligence bubble has been inflated based on the idea that you need bigger and bigger models, trained and run on bigger and bigger GPUs. A company has come along and challenged this narrative - in ways both substantive and questionable - and now the market is panicking about the $200 billion wasted on AI capital expenditures."

The AI bubble was inflated based on the idea that we need bigger models that both are trained and run on bigger and even bigger GPUs. A company came along that has undermined the narrative - ways both substantive and questionable - and now the market panicked that $200bn got wasted on AI capex
- Ed Zitron (@edzitron.com) 2025-01-27T12:18:32.735Z

Ed Zitron on Bluesky

Last week, the newly elected US President Trump announced a new AI research initiative that will provide $500 billion in funding over four years. This project includes the development of huge data centres and power plants to support AI.

DeepSeek achieved all this with a limited amount of Nvidia chips and limited financial resources. Now, this raises the question of whether large investments are really necessary for the advancement of AI.