SEC charges Nvidia with inadequate disclosures about impact of cryptomining

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

by taubek • 4 years ago

407 270 4 years ago

dean177• 4 years ago

"The SEC’s order also finds that NVIDIA’s omissions of material information about the growth of its gaming business were misleading given that NVIDIA did make statements about how other parts of the company’s business were driven by demand for crypto, creating the impression that the company’s gaming business was not significantly affected by cryptomining.

The SEC’s order finds that NVIDIA violated Section 17(a)(2) and (3) of the Securities Act of 1933 and the disclosure provisions of the Securities Exchange Act of 1934. 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."

Lukineus• 4 years ago

"NVIDIA agreed to a cease-and-desist order and to pay a $5.5 million penalty."

Cost of doing business.

hef19898• 4 years ago

Yes, on the other hand not being called out by the SEC for insufficient disclosures helps with investor trust.

ekianjo• 4 years ago

thats pocket money for nvidia

H8crilA2• 4 years ago

More like the SEC lacked evidence that this was intentional.

Remember about the SEC whistleblower program, if you had inside proof of intent the fine would be a lot higher, and you'd get a share of the fine!

JumpCrisscross• 4 years ago

This sets the stage for shareholder lawsuits, which are better equipped to assess actual damages.

nullc• 4 years ago

Many of these actions are specifically geared to tee off civil lawsuits, so the total cost can be significantly greater.

sedeki• 4 years ago

What's the rationale behind this omission on NVIDIA's part?

synu• 4 years ago

Presumably that the fine will be much, much less than whatever the value of the benefit is that they earned from the omission.

infinityio• 4 years ago

The fine was ~$5M, nvidia made ~$10B last year - It's approximately equivalent to the amount of money they make in 4 hours

blihp• 4 years ago

Minimizing the perception of downside risk in sales when it dries up to keep share prices higher than they otherwise would be. Had they come out and said approximately X% of a given quarter's sales were mining related, it would have most likely been priced into the stock as cyclical sales with a lower resulting multiple.

edit: this is an old story see previous discussion https://news.ycombinator.com/item?id=31284952

Out_of_Characte• 4 years ago

Thats still strange as the lowered gaming sales are partly due to increasing prices from crypto miners and higher material costs. Their profit margin and sales only grew larger during this time

rcxdude• 4 years ago

Two things: (GPU) cryptomining is extremely unpopular with PC gamers, especially those who DIY build PCs, because the demand for GPUs for mining is substantially worsening the general GPU shortage, pushing prices even higher. NVIDIA has made a lot of noise about how they are on the 'side of gamers' (such as with their Low Hash Rate cards which have a software lock designed to reduce mining efficiency which held for about a year or so), but in general seems to have been happy in practice to make as much money as they can off of it. So NVIDIA has a marketing interest in downplaying the impact of cryptomining on the shortage while selling as much as they can into the high demand and high prices at the moment. (And tech journalists communicating to these gamers do read these reports and tell the consumers about this stuff)

Secondly, from an investors point of view, GPU cryptomining demand is seen as a lot more volatile than PC gaming demand. A crypto crash or the planned ethereum switch to proof of stake could reduce this demand substantially. If a larger fraction of NVIDIA's sales (and thus revenue) is due to cryptomining, it's less likely to be similar next year (not only because cryptomining might buy less new cards, but also because they might flood the market with used cards, reducing demand for new cards from PC gamers, which happened during the last big crypto crash). This is the main reason the SEC is not happy about it. When reporting to investors NVIDIA also has an incentive to downplay crypto-related demand.

senko• 4 years ago

duplicate: https://news.ycombinator.com/item?id=31284952

YedrickTheYeti• 4 years ago

Wouldn’t this have been obvious to anyone trading in nvidia shares though?

DeathArrow• 4 years ago

The punishment should be proportional with the sales for cryptomining which they lied about. Investors can be seriously affected by this.

A few million is not a punishment it is encouraging Nvidia to do nasty things in the future since they know they can get away with it.

thathndude• 4 years ago

Agreed. I was invested in NVDA during this period. Should look back and see how the stock performed during the relevant period.

runeks2• 4 years ago

I’m curious: how difficult would it be to win a suit against Nvidia with this SEC charge in hand?

mbesto2• 4 years ago

Investors can be seriously affected by this.
A few million is not a punishment it is encouraging Nvidia to do nasty things in the future since they know they can get away with it.

Ok so tell me precisely how much NVDA benefited by not disclosing how much sales were to crypto?

I'm a NVDA stock holder and I just don't see what the fuss is. It's been impossible to buy a Nvidia card over the last 3 years due to scalpers and crypto farmers. I guess I thought everyone kinda knew that?

birracerveza• 4 years ago

The problem seems from stem from the fact that if NVDA disclosed that crypto amounted to 5% of their market when instead it's 5 times as much (random numbers for the sake of the example), investors are bound to suffer more in case of a crypto market crash, because the crypto exposure is much higher than what was disclosed by the company.

flerchin• 4 years ago

If I were the SEC, I'd say that they lied about it to avoid a risk discount on their stock. The volatility of crypto currencies exposes their business to more risk. Whether that's true, or provable, IDK. However, it is motive for Nvidia to lie, and they did lie.

remram2• 4 years ago

Punishing the company just hurts investors further. The board members or CEO should be fined personally if they lied.

Traster• 4 years ago

This is kind of funny because the SEC is basically saying Nvidia held their share price artificially high by doing this, but Nvidia also bought back billions of their own shares, by this logic they were overpaying.

spupe• 4 years ago

Stock buybacks also increase stock prices, and a lot of companies are doing it lately.

kgwgk2• 4 years ago

Securities fraud squared!

projektfu2• 4 years ago

That is a separate issue. Stock buybacks can be done to reward insiders. A dividend would be distributed equally and has the effect of directly cutting the share price. A buyback distributes cash unequally and puts upward pressure on share prices. Only insiders know for sure if the action is being done to buy back shares on sale or to distribute profits.

rileymat24• 4 years ago

and puts upward pressure on share prices

I am curious if there is evidence for this. I don’t see how distributing capital that could be used for growth pressures share prices up.

People not selling back the shares are trading the current profits for a bigger share of future profits, which may never exist. So I am not sure on a risk adjusted discounted cash flow model there is any justification for increased price pressure.

I always presumed that the main benefit of buybacks v dividends was being able to time capital gains for tax purposes.

But this is all speculation too, no evidence behind my post.

Msw2422• 4 years ago

A buyback increases EPS and makes the shares worth more. Same pie, fewer slices.

It is just a more tax efficient way to distribute earnings.

99_00• 4 years ago

Stock buy backs and dividends benefit or harm all shareholders in proportion to how much stock they own regardless of being an insider or not.

Unless the insiders act illegally. If an insider wants to act illegally they can do so in any number of ways other than knowing that a buy back is coming.

Slartie2• 4 years ago

The most successful fraudsters eventually start to fully believe their own fraudulent story. This of course entails to do things that make sense in the fraudulent narrative, but are actually disadvantageous when judging them from a viewpoint outside of the fraud.

Shadonototra• 4 years ago

You think wrong, if they commit, it's to push their agenda even further, they knew what they were doing, maybe they did in preparation for such charges

indemnity• 4 years ago

Buybacks increase prices, a large part of compensation is linked to share price, executives don’t care if the company is overpaying, they see more in their pocket.

mcv• 4 years ago

I don't quite get this. Was it not blatantly obvious to everybody that Nvidia's sales were largely driven by cryptominers? Did they specifically market to cryptominers and lie about that or something? I don't quite get what they did wrong.

What's also baffling to me is how their share price is taking a nosedive because of this news. Any investor should know about this. And $5 million fine doesn't sound like enough to hurt the company that much.

But if it's true that they misled investors, does that mean that investors can get their money back or something? It seems like any investor who wasn't aware of this is now screwed twice.

cormacrelf3• 4 years ago

Not putting “blatantly obvious” things in the disclosure documents is WORSE than omitting obscure things. The market for Nvidia stock is not made up of the same people who buy their graphics cards. Maybe even almost no crossover. The prospectus regime for public companies is there to protect ordinary investors who do not know this stuff. The overall effect is to increase the “smartness of money” by avoiding people investing who do not know this basic stuff. And yes there is a robust regime for investors to sue for defrauding them in this fashion.

dhzhzjsbevs• 4 years ago

The more I learn about finance the more I'm confused how 2008 actually happened. We actually have some pretty good regulations in place.

Jon_Lowtek2• 4 years ago

People suing nvidia about their 2018 quarterly reports is actually what happened, the SEC fining them years later is just the cherry on top.

See for example case 18-cv-7669 by the "Ironworkers Local 580 Joint Fund" from late 2018, which was later merged with a class action lawsuit.

Nvidia talked about crypto in their 2018 quarterly filings but they allegedly downplayed the effect on the company.

Analysts upgraded their rating, growth prediction of 17%, shares trading at record price. (for the time, not comparable to today)

In the last quarter of 2018 crypto crashed, nvidia revenue dropped by 7%, and the share price by 29%

dangerface8• 4 years ago

The market for Nvidia stock is not made up of the same people who buy their graphics cards. Maybe even almost no crossover.

I think this is the problem you have investors buying stock in a company they have no concept what that company does they just know its a hot stock because the price is currently pumping. They go all in with no due diligence assuming the price will continue to pump for no reason and when it doesn't and the supply demand level out they act like they where scammed like the company should have told them when to buy and sell.

bionsystem• 4 years ago

If you have a publicly-listed company you have to disclose all macro, market, and sector/industry risks (as well as company-specific risk) that might impact investors. The mere fact that they didn't disclose it (in 2018) is blamable.

Their stock price doesn't tank on this news, it's trending down along with BTC and other crypto assets. The market isn't stupid, it's pricing into NVDA price the risk of cryptos going into a prolonged bear market.

Investors will probably never get their money back. First of all, NVDA stock is up a ton since 2018, and second of all, shareholders are considered full risk-on and should diversify. Class actions are possible but highly improbable to work. The company has been buying their stock back too which show their commitment to reward shareholders as well.

Slartie2• 4 years ago

It was obvious to the gamers who tried to buy a GPU for a reasonable price. If you put some time into this endeavor, you were bound to see all those cards coming in to retailers immediately being bought, with a few appearing on secondary markets at higher price tags but being bought away very quickly there as well. This occurring in parallel with a huge bunch of "looking for GPUs A, B, C, D, offering $ridiculous_price in cash, will take any number of cards" offerings on Craigslist and similar platforms speaks a clear language: nobody is trying to secure various different GPUs despite high prices in basically unlimited numbers for GAMING! Nor do gamers buy up all those overpriced secondary market offerings within minutes of them being posted.

But: the stock market investors that are moving the really big bags of cash rarely have hours and days to spend trying to hunt down GPUs for their gaming rigs. So they wouldn't see these obvious hints.

BlueTemplar2• 4 years ago

And it's still not over - early 2022 prices for RX 580 (and the like) were still 4 (FOUR !) times higher than in 2020 !

https://web.archive.org/web/20220126135425if_/https://cdna.p...

EDIT : Never mind, still 2x prices, but seems to start coming down ?

https://cdn.wccftech.com/wp-content/uploads/2018/04/Asus-RX-...

MrFoof• 4 years ago

I managed to get some GPUs at MSRP over that period and as I got something a bit faster over that period, I would sell to defray my upgrade cost.

I tried to restrict to US buyers to try to get it in the hands of someone who just wanted to play games.

They went to US addresses as my shipping restrictions and other exclusions required, but I unexpectedly got dinged for “International Fees” by eBay.

So I dug in as to why. When I checked the shipping address in Google Maps, they were warehouses. Googling again, known freight forwarders.

From what I can ascertain, one likely went to Qatar, and the other ended up in Uzbekistan. The accounts that bought them were quite old, not new, and had extremely high quantities of feedback. Based on the absolutely extreme auction end prices ($1540 for a 3070!), I wasn’t surprised in the end. The buyers were clearly extremely well organized and had exceptionally professional communication.

omega3• 4 years ago

I think the gist is that they’ve intentionally misled investors by misclassification of sales from more violative, unpredictable crypto into stable pc gaming market.

voxic11• 4 years ago

There is nothing in this Press Release which indicates the SEC thought nvidia's failures were intentional.

Havoc• 4 years ago

This is a non story. They missed something in the laundry list of legal disclosures that goes in the financials. Nobody ever looks at those since they’re a useless shotgun approach covering everything short of zombie apocalypse.

freemint5• 4 years ago

This is very much not just missing a laundry list of legal disclosures. They actively lied to investors said increased sales of consumer graphic cards was due to a "Fortnite Boom" when it obvious to industry observers that is was a mining boom. Miners and Fortnite players have very different life-time revenue expectation, miners tend flood the used market with used cards dropping the prices that can be asked for future products, gamers tend to keep their cards and buy new cards when they want to play more demanding games. This leads to less of oversupply on the used market. The last mining bust had a huge negative influence on Nvidia.

_jab• 4 years ago

I'm confused about why this matters. From anecdotal experience, Nvidia seems to be struggling to meet demand for its products right now anyways. It's hard to tell, but I assume that even if crypto took a major hit, Nvidia could still sell a good chunk of its newfound supply to genuine gamers instead. Alternatively, they could invest more into their ML-focused chips instead, which are also supply constrained.

Granted, this might not have been true in 2018, which appears to be what the SEC's charge is focused on. Nonetheless, I don't think the huge amount of demand from crypto for Nvidia's products should be construed as a bad thing; there's plenty of other demand.

Tuna-Fish• 4 years ago

Companies are not allowed to lie to their investors. Part of the deal of being a public company is that all communication is communication with their investors. If they told their investors that they were selling GPUs to gamers, while in fact selling most of them to miners, they violated the law. The principle of it being that said investors might have had a different outlook on the company depending on who they were selling to.

Besides, there is a difference. Because whenever crypto collapses (and it has twice already in the past), a lot of the existing mining GPUs end up on the secondary market. If this happens now, it will have a material impact on the prices of GPUs going forwards.

mschuster91• 4 years ago

On the other hand, NVIDIA does not have legal authority to control where its GPUs actually end up being used (nasty things like drivers shutting down when detecting virtualizations aside). How can anyone prove or disprove that a specific percentage of GPUs end up in a specific market, as long as NVIDIA can prove they have kept their usual delivery targets towards wholesale distributors?

ajdegol• 4 years ago

I certainly wouldn't want a second hand GPU that'd been used for mining; it'd be ragged.

dangerface8• 4 years ago

they told their investors that they were selling GPUs to gamers, while in fact selling most of them to miners

I don't think nvidia even did this, they marketed to gamers and reported the correct number of sales. What people do with the card once its sold is not up to nvidia its not information that an investor can reasonable assume nvidia will report on.

If I invest in a steel mine they market their steel to car manufactures and report the correct number of sales. If they also happen to sell to gun manufactures I can't then sue said company for not reporting that.

TheBigSalad• 4 years ago

It matters because people asked the question about how much of the business was crypto based and they lied.

PragmaticPulp• 4 years ago

GPU mining was consuming much more of the supply than you suggest (that’s literally the basis of this lawsuit)

When the GPU mining bubble pops, there’s a secondary effect as miners unload their used GPUs at fire sale prices on the secondary market. This means that the demand reduction is even worse than it might seem.

paxys• 4 years ago

What about a year or so later when supply chains are back to normal and crypto demand dries up? Suddenly investors are wondering why their revenues are falling 50% instead of 5% that they predicted.

babypuncher• 4 years ago

A better question to ask is "why did Nvidia feel it was necessary to lie to their investors?". Lying to your investors is illegal, regardless of whether or not you profited from it.

lvl1023• 4 years ago

I remember I was short the stock via puts quite a bit and they kept saying crypto was 5% of the business which I knew was a lie. It turned out great for me. Fast forward to 2022, you see how much of the GPU “shortage” was due to crypto mining especially in Russia (there are enough anecdotes of people in Siberia heating their kitchens with GPUs).

daniel-cussen7• 4 years ago

Right so using waste heat that way is more ecological.

wffurr• 4 years ago

If only the computing hardware generating that waste heat was doing something useful like serving funny cat pictures.

IAmEveryone• 4 years ago

I have some doubts that any significant amount of cryptomining is actually done in Siberia. Part of that would include a few questions of the definition of “Siberia”, a deep examination (i. e. a suggestion to google) people’s ideas of the weather condition at that hypothetical place, and maybe a comparison of efficiency of heating a typical rural Russian home with coal vs. burning coal to generate electricity to run GPUs, after transmission over sowjet-era grids.

Considering how cryptocurrencies seem to attract the get-rich-quick crowd, it’s impressive to see the levels of motivated reasoning they are capable of, since neither motivation nor reasoning alone seem to be among their usual strengths.

varenc• 4 years ago

If and only if you would have used electrical heating anyway, then using a GPU's waste heat for heating your home is one of the best things you can do with it and it's "100% efficient". That is, 100% of all the energy your GPU consumes also ends up as heat in your house and it's thermodynamically equivalent to any other type of resistive electric heater.

Of course, the energy consumed by any even semi-serious mining operation far exceeds a home's heating needs.

xxs2• 4 years ago

Except using heat pumps is a lot more efficient than resistive heating... and/or adding a proper insulation.

kimburgess2• 4 years ago

See: https://blog.qarnot.com/introducing-the-qc-1-crypto-heater/ (2018)

Such a beautiful idea, if only the computation was actually useful.

legutierr• 4 years ago

there are enough anecdotes of people in Siberia heating their kitchens with GPUs

Hey, all you blockchain skeptics, here’s what you are always asking about: a practical use for blockchain tech.

co_dh• 4 years ago

Is this the reason of global warming?

robin_reala• 4 years ago

Resistive heating will generally be less efficient than heat pumps, although potentially Siberia is cold enough to mitigate that?

driverdan• 4 years ago

This is pretty common. I've been using my gaming rig for cryptomining in cold weather for years. I make money and keep my office warm, win win.

tenthirtyam• 4 years ago

This was the best blog I ever noticed on this topic,an Australian using exhaust air from their miners to pre-heat incoming air to their heat pump. TL;DR - it's worth it.

https://blog.haschek.at/2021/how-i-heat-my-home-by-mining.ht...

peri2• 4 years ago

Ah, money laundering, the international past-time-space-crime.

paganel• 4 years ago

due to crypto mining especially in Russia

When the war started in neighbouring Ukraine (I live in Romania) the local market started seeing graphics cards again which, previously, had been marked by local official resellers as "not in stock for the near future". This is for business procurement, so not even retail.

vkou• 4 years ago

Card supply/demand delta has already been slowly easing up over the months leading up to the war.

px433• 4 years ago

Do you think it's more than 5%? Maybe it is, but it seems like every place that offers GPU rental services (Amazon, Vast, etc) they are being used almost exclusively for machine learning applications. The rate they can be rented out is 3-4 times higher than would be profitable for any cryptocurrency mining, which should be a pretty solid indicator of where the demand is actually coming from.

I know I'm in the minority, but my GPUs are used almost exclusively for password cracking. I've got ASICs for the crypto mining.

lvl1023• 4 years ago

I think the overall impact of crypto is 30-35% of their business.

rytill• 4 years ago

What software do you use for GPU password cracking? Custom? And for what purpose?

muttled• 4 years ago

I had a rig on Vast. It wasn't 100% utilized. It mined crypto when it wasn't rented for ML applications.

thesausageking• 4 years ago

If, at the time, you had bought the stock instead of shorting and held onto it, you'd be up 64% today.

lvl1023• 4 years ago

I made something like 100x on that trade so I think I did OK.

t_mann• 4 years ago

It's kind of strange/funny how much trouble too much demand can cause for a company.

dangerface8• 4 years ago

Is the sec concern trolling nvidia? What do they mean by impact?

the sale of its graphics processing units (GPUs) designed and marketed for gaming

SEC recognises that these cards where marketed to gamers and even recognise that the parts of NVIDIA marketed toward crypto mining was reported as crypto mining.

It seems like nvidia did business as usual and the real problem is those filthy gamers that aren't gaming.

If NVIDIA reported its gaming cards to SEC as crypto cards, now that the crypto market is dead and those cards are being used for gaming would SEC still consider NVIDIA to be in the wrong for their undisclosed impact on gaming?

Seems like SEC is mad at gamers for making money instead of gaming and they are taking it out on NVIDIA. Im just glad some one is standing up to these filthy gamers.

Sakos4• 4 years ago

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. 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 SEC’s order also finds that NVIDIA’s omissions of material information about the growth of its gaming business were misleading given that NVIDIA did make statements about how other parts of the company’s business were driven by demand for crypto, creating the impression that the company’s gaming business was not significantly affected by cryptomining.
“NVIDIA’s disclosure failures deprived investors of critical information to evaluate the company’s business in a key market,

Sakos4• 4 years ago

Seems like SEC is mad at gamers for making money instead of gaming and they are taking it out on NVIDIA. Im just glad some one is standing up to these filthy gamers.

1) Weird of you to add everything after your first sentence without indicating you edited your comment.

2) I have no idea what you're talking about. This isn't about nVidia reporting their cards as crypto cards. This is about nVidia not reporting what portion of their revenue is subject to volatility in the cryptomarket. SEC isn't mad about anything. It sounds like you're mad, tbh, and I'm not sure why.

dangerface8• 4 years ago

This is about nVidia not reporting what portion of their revenue is subject to volatility in the cryptomarket.

Nvidia doesn't know what customers use their cards for and it especially doesn't know the volatility of the market, no one does. If nvidia knew market volatility before hand they wouldn't need to make gpu they could just trade the market more efficiently than every one else.

You and SEC are talking about pure speculation as if it was fact, nvidia didn't speculate in their reporting they gave accurate numbers as they should. Until you can show otherwise its all just speculation.

ideamotor• 4 years ago

You sound like Elon Musk. Rule of law and fair play is what makes the US economy work and grow.

dangerface8• 4 years ago

Thanks

daniel-cussen7• 4 years ago

This is true. I met a prince once, named Mikhail von und Zu Lichtenstein Oyarzún. Weird fucking guy, but that's how princes are, I didn't judge.

But then lo and behold he traveled to Spain, a country which recognizes nobility, and tried arrogancing his way into a party (like "what do you mean I'm not on the list!?"). The press asked who the fuck is he, asked his parents, his parents weren't his parents, his parents had no idea who the fuck he was. Said as much publicly. "I have no fucking idea who this asshole is" said his father.

And then he was on TV in 2017 or 2018 as the world-class bullshitter of all time, but with much contempt. He had hours of talk-shows just for him, his law school professor going in front of the camera saying what he did was illegal because he pretended to have authority. He was a scammer, in particular he posed as a human-rights lawyer targeting victims of torture to get their secrets and extort them. Tried to do it to me, but you can't con an honest John.

So what happened, going back to your point? He brainwashed himself, told himself he was a prince 10 million times. But lied to himself literally 10 million times.

alisonkisk2• 4 years ago

He was a scammer, in particular he posed as a human-rights lawyer targeting victims of torture to get their secrets and extort them. Tried to do it to me, but you can't con an honest John.

You are calling victims of tortures liars?

isthisbothigh• 4 years ago

Which drug is this bot on? Seems to be high.

ask_b123• 4 years ago

I looked Mikhail von und Zu Lichtenstein Oyarzún up and it seems like the story might be true to some extent. Seems like a person that was impersonating a prince.

dang• 4 years ago

We detached this subthread from https://news.ycombinator.com/item?id=31408429.

Dave3of5• 4 years ago

I think the amount is far too low but charging them is reasonable. Maybe they won't do it again. I suspect with such a low fine they don't care really and they'll just pay it.

t0suj4• 4 years ago

So is this basically failure of disclosure that they made a quick buck off the crypto craze and attributed that to the gaming market?

gitfan86• 4 years ago

Which is material to investors like me who think that crypto is a house of cards and gaming has long term growth potential

BlueTemplar2• 4 years ago

FYI 5.5 M$ is 1 hour 47 min of Nvidia's revenue and 16 hours worth of net income.

tiku• 4 years ago

So a GPU made for gaming is used for computing something, and then it is their fault? Would they rule the same if you sell knives for Bushcrafting, but they are using the knives in kitchens?

And one could argue that gaming is also rendering / computing / solving problems.

tehbeard2• 4 years ago

It's not about how the customer used them.

It's about what NVidia told their stockholders in reports.

Rather than: "This years growth is fueled by sales to the cryptominer market" (which is a pretty dang volatile market to sell to as a crash will floor nvidia's market with cheap used cards rather than selling overinflated new ones...)

They lied and said: "oh yeah no, totes all those gamers buying cards for sick rigs", and the pc gamer market is much more stable, it's predictable, you know roughly when / how much of the market will be buying new to replace a card that's now too old/limited.

tl;dr they lied about who they were selling to, because the volatility (no guarantee of that market still existing in a year or two's time) would make shareholders understandably nervous.

dangerface8• 4 years ago

I have seen several people claim nvidia lied and was telling investors that their increase in sales was because of a fortnight boom but I can't find where nvidia allegedly said that.

It seems like they didn't lie they sold gpu and reported the correct number of gpu sold. The only claim nVidia made was that it marketed these cards to gamers which the SEC acknowledges they did, this isn't a lie.

Aissen• 4 years ago

The settled charged which Nvidia agreed to pay: $5.5M. What they will pay for failing to buy ARM with all this inflated stock cash: $2B.

hexo• 4 years ago

SEC charges company for not disclosing trade secret. What a shame.

freemint5• 4 years ago

As a publicly traded company you have to disclose certain trade secrets. Tough Luck.

techwiz137• 4 years ago

It's interesting to note that their stock started to take off somewhere in 2014 and exploded in 2017, correlation doesn't mean causation, but it's fits so perfectly with the rise of mining.

Well rise of mining is somewhat a misunderstanding, because since I've been a frequent user of cryptocurrency since early 2011, from my point of view that's when GPU mining started but I digress.

duxup• 4 years ago

Didn't they settle this already?

https://www.engadget.com/nvidia-sec-settlement-crypto-mining...

vmception• 4 years ago

Yes the dates match up with this article

Its old news by a week or week and a half

whatever12• 4 years ago

I was always wondering why the big players don't just make ASICS for crypto mining that would make happy both the miners (with their faster speeds) and the gamers (who would not have to compete to get a gaming card).

But now it is obvious to me. It is better to have in your earnings gpu sales because you can always claim that you expect a steady source of income. If they had 60% of their revenue explicitly from a volatile market like crypto mining, then their stock would not look attractive.

_-david-_• 4 years ago

Nvidia has a GPU for crypto. I don't think it helped.

https://www.nvidia.com/en-us/cmp/

whatever12• 4 years ago

It was just paper released less than a year ago during chip shortage, I doubt that they produced any significant amount of them.

Their performance was also luck luster compared to the consumer rtx cards.

peri2• 4 years ago

About damn time, IMO. But as I fix nVidia's bugs, I'm obviously ignorant of anything impacting Serious Cryptographic Engineering.

alangibson• 4 years ago

I'm pretty content to buy Nvidia on the way down. Their position in the type of silicon that is essential to the future of computing would be very hard to assault.

aj7• 4 years ago

Now I know how gun manufacturers feel, although I’m not on their side.

jijji• 4 years ago

How would Nvidia even know what people are doing with the cards they purchase? Thats like saying that Intel should disclose that a large portion of its chips are being used to siphon porn off the network.

bufferoverflow• 4 years ago

I don't see how it's Nvidia's job to track how their products are used exactly.

colonelxc• 4 years ago

They don't have to. The problem is that they said to investors repeatedly, "Sales are up due to increase in gaming demand", when they actually knew that a signficant portion of the increase was due to cryptomining.

So what the SEC is fining them for is lying to investors. If nvidia didn't know how much of their sales were to cryptomining, then there would be no fine. If they did know, and did share that in their reports, there would be no fine.

JamesBarney5• 4 years ago

It is their job not to mislead investors about how their products are used.

This is not a fine for "You didn't know how your product was being used" but "you knew it was being used for crypto but reported to investors that it being was gaming"

zmmmmm• 4 years ago

While this seems like something the SEC should indeed be paying attention to, it pales into comparison with Elon Musk openly breaking every rule in the book on Twitter while they do absolutely nothing (up to and including directly pumping and dumping stock ...)

elevenoh2• 4 years ago

What actual rules did elon break?

elevenoh2• 4 years ago

What a perverse incentive racket the SEC is

faangiq• 4 years ago

No bonus clawbacks, no care.

heywoodlh• 4 years ago

This a little off-topic, but is there any sort of solution to crypto miners intercepting gaming GPUs?

As a gamer, part of me gets annoyed that crypto-miners make it more difficult to get gaming GPUS. On top of that, the massive energy consumption caused by crypto mining feels excessive.

But the freedom-loving part of me feels uncomfortable with solutions meant to prevent gaming GPUs from being used for crypto mining (let me use my hardware however I want).

Is there some sort of better, arm-chair-expert compromise?

SEC charges Nvidia with inadequate disclosures about impact of cryptomining

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