Nvidia has paid a $5.5 million fine to settle charges that the GPU maker withheld the true impact of cryptocurrency mining on 2017 revenue.
The US Securities and Exchange Commission (SEC) made the settlement public Friday, saying the chip designer “failed to disclose that cryptomining was a significant element of its material revenue growth” for GPUs that are designed and marketed for PC gaming.
“Nvidia’s disclosure failures deprived investors of critical information to evaluate the company’s business in a key market,” said Kristina Littman, chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit.
“All issuers, including those that pursue opportunities involving emerging technology, must ensure that their disclosures are timely, complete, and accurate,” she added.
Nvidia declined to comment.
The SEC said Nvidia knew cryptomining was having a “significant” impact on sales growth for the company’s gaming business during most of 2017 but failed to disclose this.
Specifically, the commission said the company did not discuss cryptomining’s impact on gaming in two quarterly SEC filings for Nvidia’s 2018 fiscal year, which ran from January 2017 to January 2018.
Also at issue was that Nvidia had made statements about how other businesses were being impacted by cryptomining, according to the SEC. The commission said this gave the impression that the company’s gaming business “was not significantly affected by cryptomining.”
Nvidia agreed to a cease-and-desist order in addition to paying the $5.5 million fine to settle charges, the SEC said.
The company has made efforts in the past few years to disclose the impact of cryptomining on its business, though said in its most recent earnings that it had “limited visibility.”
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“Volatility in the crypto market including changes in the prices of cryptocurrencies or method of verifying transactions, such as proof of work or proof of stake, can impact demand for our products and our ability to accurately estimate it,” Nvidia CFO Colette Kress wrote [PDF].
Knowing that GPUs have become increasingly harder to find in the past couple years, Nvidia made changes to its GPU lineup last year to dissuade cryptocurrency miners from buying gaming GPUs while also giving them dedicated chips for such activities.
To discourage the use of gaming GPUs for cryptomining, Nvidia halved the cryptomining efficiency of new GeForce graphics cards starting in early 2021.
However, there were efforts to sidestep Nvidia’s anti-mining protections, and some miners said the limited hash rate of such graphics cards haven’t stopped them from raking in the big bucks.
At the same time, demand for Nvidia’s Cryptocurrency Mining Processors, collectively known as CMP HX, has significantly waned since they were introduced early last year.
The cryptomining chips only brought in $550 million in Nvidia’s 2022 fiscal year, which was a pittance considering that its gaming business brought in $12.4 billion during the same 12-month period. ®
