This is widely used in, for example, price discounts for senior/retired people.
By targetting different market segments with different prices you can
maximize profits because their price sensitivity is different (i.e. miners are likely to buy at higher prices, while regular consumers will sharply reduce their willing to buy at those same prices).
This is true as long as the following conditions are met:
Consumers can't easily switch between segments (i.e. a retired man can't suddenly turn into a child)
Consumers can't (easily) resell their goods to the other segments
It's a monopoly (or oligopoly). In a perfect market situation, your competitors will offer cheaper prices for your more costly segment.
This is the same reason why consoles used to be region locked. Otherwise it would be convenient to travel to the cheapest region, and then bring those products back to your home country for resell.
In order to enforce these requirements, GPUs used for gaming can't be used for mining.
Additionally there could be other reasons. For example NVIDIA wants to heavily push Raytracing because it gives them an edge compared to the competition.
However games will not adopt Raytracing if a large portion of their users don't have capable cards. Right now the number of titles supporting RT is low. And those who do, it is just an optional gimmick that doesn't add much to the experience; and the first gen RT cards (i.e. RTX 2080) aren't fast enough for a raytracing-rich experience.
Limiting the hash rate is maximizing the demand for their product.
Historically, gamers have been crucial to Nvidia's success. Their demands drive innovation, and they're the ones willing to spend top dollar to buy expensive new flagship products with the latest features. The war between ATI (now AMD) and Nvidia for market share among gamers has been raging for decades.
One of Nvidia's other big customer segments is the scientific computing community. Their graphics cards are used to accelerate all sorts of compute-heavy workloads, from machine learning to self-driving cards to simulating the inner workings of a black hole.
Both of these key market segments are really hurting right now due to crypto miners snatching up all of the available graphics cards. By making their cards less attractive to miners, they're showing that they still care about their core customers and aren't abandoning them over the latest fad. It makes businesses more confident that they can build their products on Nvidia technology without worrying about whether they can source the hardware to build their products.
Increasing the available supply of cards for non-miners also gives Nvidia a chance to steal normal users from their competitors whose cards are still monopolized by miners and aren't available for purchase. This is a relatively easy way to potentially pull in a large number of gaming users, a demographic that tends to have a lot of brand loyalty. If ATI limits the hash rate and Nvidia doesn't, then they risk losing a lot of users.
It's not really about how many cards they sell. Their number of unsold cards is currently as close to zero as it will ever get. Limiting the hash rate results in the same overall number of cards being sold, but satisfies a greater number of customers. Those customers represent a diverse range of market segments and use cases. Allowing a relatively small, highly specialized user group (crypto miners) to eat up the bulk of the company's output is not a good strategy for ensuring the company's long-term growth and success. Should crypto go out of vogue, they'd lose the lion's share of their sales and the bulk of their customer base would have already moved on to other vendors who cared enough to ensure product was available for them.
Disclaimer: I am not at all familiar with the hardware industry; in fact I believe this answer makes most of my points but is better tailored for the specific industry in question.
A possible explanation is that Nvidia has a market share to maintain. If few computers are equipped with their new graphics cards and few people play games on them, it is possible that designers will move on to more available graphics cards. This could hurt Nvidia in the future.
Another possible explanation is vertical discrimination/screening by quality. The idea is that if a company sell two products that are imperfect substites of each other, and one is clearly of better quaility, the company can put a high price on a premium product (designed specifically for ethereum mining) and a lower price on the inferior product (designed for gaming). The more price sensitive consumers will pick the later, enabling the company to practice second degree price discrimination.
The 486SX processor of Intel Corporation was initially produced in a
curious way. Intel began with a fully functioning 486DX processor,
then disabled the math coprocessor, to produce a chip that is strictly inferior to the 486DX but more expensive to produce. Nevertheless, in
1991, the 486DX sold for \$588, and the 486SX for \$333, a little over
half the price of the chip that is less expensive to produce (Frenkel,
We will argue in this paper that this is not an isolated incident,
and that many manufacturers intentionally damage a portion of their
production. The obvious reason for doing so is to permit price discrimination. By producing an inferior substitute, the manufacturer
can sell to customers who do not value the superior product so much,
without decreasing demand for the superior product very much.
Note: In the comments under this answer people more knowledgeable about the industry write that this is an oversimplification of 486_X story. Could well be!
Many people have concerns about the detrimental environmental effect of cryptocurrency mining, thus it is possible that the above is also a PR move to protect Nvidia's image.
To understand NVidia's position, it helps to understand a bit of the manufacturing background.
NVidia's GPU's are very high-tech products. NVidia itself does not manufacture them. NVidia is known as a "fabless" vendor; it doesn't have the "fabs" (factories) in which chips are made.
Instead, NVidia relies on TSMC and Samsung. These companies operate the fabs that are shared by many fabless vendors. This makes sense, because a fab is incredibly expensive nowadays. TSMC for instance is spending 44 billion USD in 2022 alone to build new fabs. They can finance this because NVidia has promised to spend billions with TSMC. Still, it takes years to build a new fab.
In the short term, it means that NVidia bought a fixed amount of capacity in the TSMC fabs. NVidia can choose how to use this fixed capacity in order to optimize revenue.
We can now apply a simple model, where NVidia has two products ("crypto" and "gamer"). Let's assume first that these products are equally complex to produce. Both products also have a fairly standard demand curve: as the price goes up, demand goes down. But the curves do not need to be identical.
In this case, we expect NVidia to select a price for both products such that the marginal profit for both chips are identical: producing one extra crypto chip will yield N dollars of profit, but this would mean producing one less gamer chip at a cost of the same N dollars.
This strategy works when there are two demand curves, for two independent markets. But this requires an artificial distinction to be made. Without the distinction, there is one product, with an aggregate demand curve. NVidia would end up selling more chips to the lower end of the crypto market, and less to the higher end of the gamer market.
I disagree with the other answer which suggests the 486 example. The reason is that the 486SX and the 486DX were competing in the same market. A single individual buyer might reasonably choose between the two. In comparison, NVidia's gamer and crypto markets have virtually no overlap.
The "market share" argument is fairly irrelevant too. GPU purchases are not strongly influenced by past purchases. Dell will happily switch from AMD to NVidia or back based on the deal they're offered today.