When great isn't great enough. 

Nvidia Corp. (NVDA - Get Report) shares slipped lower in pre-market trading Friday after the chipmaker posted stronger-than-expected first quarter earnings but spooked investors by revealing details that indicate an increasing reliance on volatile cryptocurrency mining activity. 

Nvidia said its first quarter net income more than doubled from the same period last year to $1.24 billion, or $2.05 a share excluding special items, a figure which soundly beat Wall Street estimates for the year's hottest tech stock. Group revenues also topped forecasts, rising 65% to $3.21 billion for the three months ending in March. However, around 10% of that top line total -- $289 million -- came from cryptocurrency mining, Nvidia said, and that number is expected to fall sharply -- by around two thirds -- in the current quarter.

"Cryptominers bought a lot of our GPUs during the quarter, and it drove prices up. And I think that a lot of the gamers weren't able to buy into the new GeForces as a result," CEO Jensen Huang told investors on a conference call late Thursday. "And so we're starting to see the prices come down. We monitor spot pricing every single day around the world. And the prices are starting to normalize."

Action Alerts Plus holding Nvidia shares were marked 2.16% lower in pre-market trading, indicating an opening bell price of $254.50 each, a move that would trim its year-to-date gain to 31.5% but still leave the Santa Clara, Calif-based group as the top performer on the Philadelphia Semiconductor sector benchmark.

The market reaction to the cryptocurrency revenues, however, belies a strong first quarter for the group, TheStreet's Eric Jhonsa noted Thursday, given that each of its reported market segments -- Gaming, Datacenter, Automotive, Professional Visualization and OEM & IP -- beat consensus revenue estimates.

Nvidia also guided for July quarter revenue of $3.1 billion, plus or minus 2%. That implies 39% growth at the midpoint and is above a $2.95 billion consensus.

"High expectations have something to do with the decline: Nvidia went into earnings close to an all-time high of $260.50, and trading for 36 times a fiscal 2020 (ends in Jan. 2020) EPS consensus of $7.19 (that's likely to go up a bit post-earnings)," Jhonsa wrote.

"Though a crpyto slowdown was expected, given improving graphics card supplies and recent remarks from AMD and Taiwan Semiconductor (TSM - Get Report) , the magnitude of the expected July quarter drop seems to have caught some investors off guard. In addition to lower cryptocurrency prices and greater mining difficulty levels, the launch of an Ethereum mining ASIC from top Bitcoin mining ASIC developer Bitmain could be weighing."