Nvidia burns $5.5 million settling with SEC on GPU sales to crypto miners

We’ve all had a bad time waiting for the graphics card shortage from late 2020 until recently, but this isn’t the first time crypto mining has been blamed. for the lack of Nvidia and AMD GPUs.

Going back to 2017 and 2018, another similar situation occurred with the GTX 10 Series, resulting in huge profit gains for Nvidia and higher prices for gamers. While the timing wasn’t as bad as the one we just went through, it does point to a trend in how Nvidia likes to handle sales.

You have the money, Nvidia has the reward

Simply put, crypto mining and productivity tasks are for business and gaming is just a hobby (for most). It is expected that profit-driven companies and individuals are willing to pay much more and buy in much larger quantities than traditional individual retail sales for graphics cards.

As things started to heat up during the last crypto boom, Nvidia was in a great position as the market leader to provide a wide range of graphics cards for the growing demand. While the company still won’t admit it, there is clear evidence that GPU sales have spiked and then dropped based on the volatile nature of the crypto market. This is where the SEC ran into problems with Nvidia’s accounting.

nvidia rtx gpu graphics card lack of crypto power supply problem

Coincidentally, Nvidia has seen a drastic drop in revenue of the RTX 20 Series as the cryptocurrency has also fallen.

As a publicly traded company, Nvidia is required by law to share information with investors so they can make future investment decisions. For whatever reason, Nvidia is at best vague and perhaps at worst dishonest with its investors. It attributed its massive revenue at the time to gaming rather than sales to cryptocurrency miners.

Even after investors highlighted the issue, there was enough doubt to get the SEC involved in examining Nvidia’s sales. This eventually led to the SEC bringing charges against the company for intentionally misleading investors. As you can imagine, this has led to significant legal negotiations.

Bustling, but unprofitable

Fast-forward to today, and the SEC has finally reached a settlement with Nvidia over its ongoing reporting of crypto sales as gaming revenue. Nvidia has agreed to pay a $5.5 million fine on the condition that it doesn’t admit any wrongdoing, but with the promise that it won’t happen again.

Just to be clear, Nvidia has every right to sell to whoever it chooses. The issue here is simply a legal one with respecting investment disclosure laws. However, the SEC is clear that they have found evidence of intentional misreporting. Even so, considering that Nvidia made nearly $27 billion in 2021, the $5.5 million fine is unlikely to upset CEO Jensen Huang. It’s also nothing compared to what Nvidia lost in its unsuccessful attempt to acquire ARM.

Nvidia Geforce Rtx 30 series Ampere crypto graphics card

Nvidia’s RTX 3080 is hugely popular, and the company continues to benefit from its massive adoption rate among gamers. (Image credit: Nvidia).

The fact of the matter is that Nvidia remains the clear market leader in GPU design, graphics, PC gaming, AI and more. Even so, it didn’t win any fanfare for those unable to get their hands on a graphics card during the 2020-2021 crypto boom. Unless it remains the clear leader in PC gaming, those feeling burned can start looking at products from competitors like AMD and, soon, Intel.

https://www.pcinvasion.com/nvidia-crypto-mining-sec-fine/ Nvidia burns $5.5 million settling with SEC on GPU sales to crypto miners

Zack Zwiezen

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