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

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We’ve all had a bad time waiting for the graphics card shortages that took place from late 2020 until recently, but it wasn’t the first time crypto mining has been to blame for Nvidia and AMD GPU shortages.

In 2017 and 2018, there was another similar situation with the GTX 10 series, which resulted in huge profit increases for Nvidia and higher prices for gamers. While the sting wasn’t nearly as bad back then as what we’ve just witnessed, it does indicate a trend in how Nvidia likes to handle sales.

You’ve got the cash, Nvidia has the splash

Simply put, crypto mining and productivity tasks are business and gaming is (for most) just a hobby. It is to be expected that companies and for-profit individuals will be far more willing to pay more and buy in bulk than with traditional retail graphics card sales.

When things got hot during the last crypto boom, as the market leader, Nvidia was in a great position to supply lots of graphics cards for increased demand. Although the company is still not admitting it, there is clear evidence that GPU sales have spiked and subsequently declined due to crypto market volatility. Here the SEC had a problem with Nvidia’s accounting.

nvidia rtx graphics card gpu lack supply problems availability krypto

Coincidentally, Nvidia saw a sharp drop in sales for the RTX 20 series when crypto was also in the red.

As a public company, Nvidia is required by law to share information with investors to enable them to make future investment decisions. For whatever reason, Nvidia has chosen to be vague at best and dishonest at worst to its investors. It attributed its massive revenue gains at the time to games rather than sales to crypto miners.

Even after investors pressed on the issue, enough doubts lingered to involve the SEC in scrutinizing Nvidia’s sales. This eventually led to the SEC filing charges against the company for intentionally misleading investors. As you can imagine, this led to significant legal negotiations.

Busted, but off the hook

Fast forward to today, and the SEC has finally reached an agreement with Nvidia over disingenuous reporting of crypto sales as gaming revenue. Nvidia has agreed to pay a $5.5 million fine on condition that it does not admit wrongdoing, but with a promise that there will be no recurring incidents.

To be clear, Nvidia has every right to sell to whoever it wants. The issue here is simply a legal issue of compliance with investment disclosure laws. However, it was clear to the SEC that it found evidence of intentional misreporting. Considering Nvidia made nearly $27 billion in 2021, that $5.5 million fine probably won’t anger CEO Jensen Huang. It’s also nothing compared to what Nvidia lost in its failed attempt to acquire ARM.

Nvidia Geforce Rtx 30 series amp graphics card crypto

Nvidia’s RTX 3080 is very popular and the company continues to benefit from high adoption rates among gamers. (Image credit: Nvidia).

The reality is that Nvidia remains a clear leader in GPU design, graphics, PC gaming, AI and much more. However, it didn’t win any fanfare among those who couldn’t get graphics cards during the 2020-2021 crypto boom. If it doesn’t remain the clear leader in PC gaming, those feeling burnt might start looking at products from competitors like AMD and soon Intel.

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