Nvidia and SEC agree to disclose information about cryptocurrencies in 2017

A sign posted in front of Nvidia headquarters on May 10, 2018 in Santa Clara, California.

Justin Sullivan | Getty Images

Nvidia will pay $5.5 million as part of settlement with SEC that he did not properly inform investors about how cryptocurrency miners are fueling demand for his graphics cards.

Nvidia did not disclose how cryptocurrency mining contributed to growth in the second and third fiscal quarters of 2018, which took place in 2017, the SEC said in a statement.

The settlement represents the end of a saga in which Nvidia, best known for making gaming graphics cards, unexpectedly saw a rise in cryptocurrency miner revenue that later refused to become unimportant. Nvidia declined to comment.

Graphics cards like those made by Nvidia are well suited for Ethereum mining. In 2017, Ethereum prices rose from less than $10 to over $800, prompting miners to buy new hardware to make money.

Nvidia’s gaming category, as the company reports these sales, grew 52% year-on-year in the second quarter of fiscal 2018 (which ended June 30, 2017) and 25% the following quarter, but Nvidia fell short. The SEC says it will reveal the impact of cryptocurrencies on this rise.

According to the SEC filing, Nvidia knew that cryptocurrency mining was part of its business.

According to the SEC statement, the company’s sales team in China at the time believed that the growth in demand for gaming GPUs was driven by miners, and Nvidia’s senior management wanted to get into the cryptocurrency mining market.

But cryptocurrency may have become a distraction for Nvidia as demand for its graphics cards for their intended use, gaming and artificial intelligence has risen.

In 2021, Nvidia released new cards designed for mining called the Cryptocurrency Mining Processor and added software to their graphics cards to prevent them from being used for mining. There were extremely few Nvidia graphics cards in 2020 and 2021 as pandemic-driven gaming demand prompted users to upgrade their home gaming PCs.

However, CMP sales have declined sharply since their introduction. In the most recent quarter, CMP generated just $24 million in revenue, up from $266 million in August 2021.

“Our GPUs are capable of mining cryptocurrency, although we have little information on how much this affects our overall GPU demand,” Nvidia CFO Colette Kress said in an earnings commentary in February.

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