Nvidia Doubles Down on the Data Center With a $7 Billion Acquisition
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Nvidia is acquiring leading network interconnect provider Mellanox for $7 billion in an all cash deal. The rise of big data and artificial intelligence has created unprecedented demand not just for faster processors but also network interconnects. Mellanox is the Nvidia of networking, its adaptors powering the world’s fastest supercomputers and AI training systems. With Mellanox, Nvidia will combine the world’s leading GPU and networking design teams under one roof.
Key to this acquisition, Nvidia is combining forces against a common foe—Intel. Having conquered the server CPU market with its Xeon processors, Intel has expanded into storage, networking, and accelerators, putting it in on a collision course with Nvidia and Mellanox.
Intel’s control of the CPU and motherboard allows it to promote its own products while boxing out competitors. With bundling, Intel is leveraging its CPU business to drive sales of adjacent products. Alternatively, Nvidia and Mellanox compete on merit, which is why their data center revenues of $3 billion and $1 billion respectively pale in comparison to Intel’s $23 billion.
We believe combining with Mellanox, Nvidia will be the most potent competitor that Intel will have faced in more than a decade. Merging the hardware and software stacks associated with the GPU and network adaptor, Nvidia should be able to deliver higher performance at a greater scale—unencumbered by the CPU. We will learn more about Nvidia’s strategy at its annual GPU Technology Conference in San Jose this week.
Bitcoin’s Long-Term Security Model Was a Key focus at MIT’s Annual Bitcoin Expo
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This week ARK had the pleasure of attending the 6th Annual MIT Bitcoin Expo. Our discussions ranged from assessing the security of open source hardware wallets to funding cryptocurrency development as well as a framework for Bitcoin’s long-term security model. During the discussion of Bitcoin’s long-term security model, Nic Carter, partner at Castle Island Ventures, laid out a framework for security spend.
Given bitcoin’s disinflationary supply schedule, miner revenue will evolve from newly issued bitcoins toward transaction fees. The question is: What level of transactions fees will be necessary to support spending that maximizes security?
At the highest level are three broad security models:
· Threshold: At a given threshold of security spend, Bitcoin is assumed secure.
· Stock: The returns from attacking bitcoin are a function of the value of bitcoin, so security spend should grow with the aggregate value.
· Flow: Fees must be large relative to transactional volume.
Whatever the answer, a vibrant fee market will be necessary for long term security. For a deeper dive, we invite you to tune into the discussion here. In addition, MITBitcoinClub will post a video of the talk during the next few weeks.
Mobile Phones Offer Bank Branches to the Unbanked
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Those unbanked fell from nearly 50% of the global population in 2011 to 32% in 2017, giving nearly 600 million adults around the world access to the basic financial services. More than a coincidence, as the unbanked rate decreased, mobile phone penetration increased, as shown in the left chart below: for every percentage point added to mobile penetration, the unbanked rate decreased by roughly one percent point.
The latest World Bank Findex report provides some perspective on the relationship between mobile penetration and the unbanked. As shown in the right chart below, the biggest increase in mobile money accounts in low income countries has been correlated with the steepest drop in the rate of the unbanked. In Sub-Saharan Africa, money mobile account penetration nearly doubled between 2014 and 2017. More than a coincidence, Sub-Saharan Africa is home to all 10 economies in which more adults have a mobile money account than have an account with a traditional financial institution.
The impact of mobile technology on financial inclusion is not limited to Africa. Other countries such as Chile, Iran and Mongolia have seen mobile money account adoption rise from the low single digits in 2014 to more than 20% in 2017. Today, two-thirds of the 1.7 billion who are unbanked globally own a mobile phone, putting them within reach of a “mobile” bank branch.
In the US, Square’s Cash App is helping to bank the 20 million people who still are unbanked. ARK believes that providing financial services to the unbanked is one of the major driving forces behind fintech.
Source:World Bank DataBank Global Financial Inclusion, GSMA