Nvidia Finished for Failing to Disclose Crypto Mining’s Impact on GPU Business

Nvidia will pay a $5.5 million fine for failing to disclose to investors how the cryptocurrency-mining boom in 2017 impacted its GPU business.

Announced(Opens in a new window) today by the Securities and Exchange Commission, the settlement says Nvidia made “inadequate disclosures” about the effect of cryptocurrency mining during two consecutive quarters in fiscal 2018, which spanned most of 2017 late January 2018. That’s when Bitcoin’s price skyrocketed from $1,000 to as high as $19,000 before a steady decline in 2018. (It started rebounding in 2020.)

According to the SEC, “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.”

(Photo: Akos Stiller/Bloomberg via Getty Images)

The cryptocurrency boom led to a wave of customers buying the company’s GPUs to mine the virtual currencies—something Nvidia knew, according to SEC. “Despite this, Nvidia did not disclose in its Forms 10-Q, as it was required to do, these significant earnings and cash flow fluctuations related to a volatile business for investors to ascertain the likelihood that past performance was indicative of future performance.” the regulator claims.

The other problem is that Nvidia made statements about how the cryptocurrency mining boom affected other parts of its business. This created an impression the company’s gaming GPU division “was not significantly affected by cryptomining,” when in reality it was, the SEC claims.

“Nvidia’s disclosure failures deprived investors of critical information to evaluate the company’s business in a key market,” says Kristina Littman, Chief of the SEC Enforcement Division’s Crypto Assets and Cyber ​​Unit.

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Nvidia declined to comment on the settlement, which also requires the company to stop withholding information from investors. But according to the SEC, Nvidia is neither admitting nor denying the charges.

The company has also been going out of the way to report the impact of cryptocurrency mining on its earnings for several quarters now. However, Nvidia has often said it has “limited visibility into how much” ongoing cryptocurrency mining affects its gaming GPU business. Still, it’s been clear many cryptocurrency miners have hoarded Nvidia graphics cards over the years, which has prompted the company to try and deter the sales, with limited results.

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