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SEC charges NVIDIA for not disclosing crypto mining impact

06 May 2022 : 16:54
2 min read
  • The SEC announced a settlement with NVIDIA Corporation for "inadequate disclosures concerning the impact of crypto mining."
  • NVIDIA has agreed to a cease-and-desist order and a $5.5 million penalty in response
  • GPUs, which are used to mine Ethereum, are becoming cheaper

The Securities and Exchange Commission (SEC) stated on May 6 that it has settled charges against technology company NVIDIA Corporation for “inadequate disclosures about the impact of crypto mining on the company’s gaming business.”

NVIDIA has paid $5.5 million fine

According to the SEC, NVIDIA failed to disclose that crypto mining represented a significant component of their material revenue increase from selling graphics processing units (GPUs) developed and promoted for gaming for consecutive quarters in fiscal year 2018. NVIDIA has agreed to a cease-and-desist order and a $5.5 million penalty in response.

As demand for and interest in cryptocurrency increased in 2017, NVIDIA customers increasingly used their gaming GPUs for crypto mining. As a result, NVIDIA reported a meaningful revenue increase in its gaming sector in two of its Forms 10-Q for 2018. However, according to the SEC NVIDIA, this increase in gaming sales was primarily driven by crypto mining.

“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.

GPUs are becoming cheaper

GPUs, which are used to mine Ethereum, are becoming cheaper as the network prepares to convert from a proof-of-work (PoW) model to a proof-of-stake (PoS) one, which would render these computer parts essentially worthless for that mining Ethereum. Crypto mining accounts for around 35% of worldwide consumer demand for GPUs.

However, the price decline has intensified this year as Ethereum developers explore the PoS approach, and the price of the second-largest cryptocurrency has plummeted. On the online marketplace, the price of ten key GPU models fell by 7.4 % in January, 9.5 % in February, and 12 % in March.

About Author

Stan Colenbrander

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Stan is the head of news and podcast host at Cryptonary. He was formerly a member of the Cryptonary Pro community. In early 2021, he decided to drop out of journalism school at university to pursue journalism in real life and make an impact in the crypto space. . His areas of interest include the NFT industry, decentralised finance, and crypto start-ups.

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