SEC Charges Nvidia with Inadequate Disclosures about Impact of Cryptomining

Kev · May 17, 2022

Summary

The SEC has found that NVIDIA lied to investors about the impact of GPU sales to coin miners. "A significant element of its material revenue growth" was from cryptomining and not real growth in the gaming space as they claimed. As supplying cryptomining equipment is a "volatile business for investors" NVIDIA is required to inform investors that a significant part of their business is based market fluctuations that may not be indicative of future cash flow. NVIDIA was issued a cease-and-desist order and must pay a $5.5 million penalty.

Quotes

Quote

The Securities and Exchange Commission today announced settled charges against technology company NVIDIA Corporation for inadequate disclosures concerning the impact of cryptomining on the company’s gaming business.

The SEC’s order finds that, during consecutive quarters in NVIDIA’s fiscal year 2018, the company failed to disclose that cryptomining was a significant element of its material revenue growth from the sale of its graphics processing units (GPUs) designed and marketed for gaming.

In two of its Forms 10-Q for its fiscal year 2018, NVIDIA reported material growth in revenue within its gaming business. NVIDIA had information, however, that this increase in gaming sales was driven in significant part by cryptomining.

The order also finds that NVIDIA failed to maintain adequate disclosure controls and procedures. Without admitting or denying the SEC’s findings, NVIDIA agreed to a cease-and-desist order and to pay a $5.5 million penalty."

My thoughts

For a few years NVIDIA has said coin miners have not been a significant part of their business, I can't find it now but I recall they said it was less then 5%. I however thought that was untrue based on the prices for GPUs more of less aligning with the prices of crypto. The stories of people in Siberia heating their homes with GPUs, "crypto bandits" in the Iranian mountains tapping into the grid to steal power, gangs stealing GPU shipments, etc. Based on the past evidence and today's SEC statement, I think this is confirmation cryptomining was responsible for the Great GPU Shortage almost entirely, or at least 80% of it.

There was real demand for gaming GPUs from gamers and that certainly pushed up the price but without the crypto surge it would have been a blip.

Sources

https://www.sec.gov/news/press-release/2022-79

CTR640 · May 17, 2022

"less than 5%" bullshit excuse has been used by more companies, see Twatter their excuse when Elon put the deal on hold.

You don't need to be a genius to know many gamers couldn't get their hands on the RTX30 gpu's because: very expensive and less chance to get one.

Quote

The stories of people in Siberia heating their homes with GPUs, "crypto bandits" in the Iranian mountains tapping into the grid to steal power, gangs stealing GPU shipments, etc. Based on the past evidence and today's SEC statement, I think this is confirmation cryptomining was responsible for the Great GPU Shortage almost entirely, or at least 80% of it.

There you got it, indeed.