A sign is posted in front of the Nvidia headquarters on May 10, 2018 in Santa Clara, California.
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Nvidia failed to disclose how cryptocurrency mining drove growth in the second and third fiscal quarters of 2018, which took place in 2017, the SEC said in a filing.
The settlement represents the end to a saga in which Nvidia, best known for making graphics cards for gaming, found itself with a surprise revenue boost from cryptocurrency miners which later declined to become immaterial. Nvidia declined to comment.
Graphics cards, like those Nvidia makes, are well-suited to mine ethereum. In 2017, ether prices rose from under $10 to over $800, prompting miners to buy new hardware to cash in.
Nvidia’s gaming category, which is how the company reports those sales, rose 52% on an annual basis in the second quarter of its 2018 fiscal year (which ended June 30, 2017), and by 25% in the following quarter — but Nvidia failed to disclose cryptocurrency’s effect on that growth, the SEC says.
Nvidia was aware that cryptocurrency mining was driving part of its business, according to the SEC filing.
The company’s sales staff in China at the time believed the increase in demand for gaming GPUs was because of miners, and Nvidia’s senior management wanted to go after the crypto mining market, according to the SEC filing.
But cryptocurrency may have ended up being a distraction for Nvidia as demand grew for its graphics cards for their intended uses, gaming and artificial intelligence.
In 2021, Nvidia released new cards intended for mining called Cryptocurrency Mining Processor, and added software to its graphics cards to prevent them from being used for mining. Nvidia’s graphics cards were in extremely short supply in 2020 and 2021 as gaming demand driven by the pandemic prompted users to upgrade their home gaming PCs.
However, CMP sales have declined sharply since their introduction. In the most recent quarter, CMP revenue was only $24 million, down from $266 million in the August 2021 quarter.
“Our GPUs are capable of cryptocurrency mining, though we have limited visibility into how much this impacts our overall GPU demand,” Nvidia CFO Colette Kress said in earnings commentary in February.