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The SEC has charged Nvidia with downplaying how crypto mining affected gaming sales

Nvidia agreed to pay $5.5 million in penalties.

The SEC has charged Nvidia with downplaying how crypto mining affected gaming sales

Nvidia is settling with the SEC.

Photo: Nvidia

The Securities and Exchange Commission settled with Nvidia over charges that the company downplayed the impact of cryptocurrency mining on its gaming business, according to a release Friday. Nvidia agreed to pay $5.5 million in penalties.

The SEC found that in fiscal year 2018, Nvidia failed to disclose that crypto mining played a big role in the material revenue growth of its gaming business. The company agreed to pay the $5.5 million penalty "without admitting or denying the SEC's finding."

“Nvidia's disclosure failures deprived investors of critical information to evaluate the company’s business in a key market,” Kristina Littman, the head of the SEC Enforcement Division’s newly formed Crypto Assets and Cyber Unit, said in a statement. “All issuers, including those that pursue opportunities involving emerging technology, must ensure that their disclosures are timely, complete and accurate.”

The commission said Nvidia reported material revenue growth in its gaming unit that fiscal year, but it left out information about how crypto mining drove that growth, creating the impression that its gaming business wasn't largely affected by purchases of processors for mining rigs. Such sales to the crypto sector helped boost Nvidia's gaming-GPU sales.

Those GPUs have historically been in high demand among miners, because the computational abilities of the cards happen to suit the requirements for the proof-of-work exercises used by some cryptocurrencies.

"As demand for and interest in crypto rose in 2017, NVIDIA customers increasingly used its gaming GPUs for crypto mining," the release states.

The settlement may end up being a historical marker of the crypto boom, however. In 2021, Nvidia introduced a specialized CMP, or Cryptocurrency Mining Processor, and made changes to its GeForce gaming processor to make it less desirable for use by miners. And though bitcoin still relies on proof of work, the Ethereum blockchain is shifting to proof of stake, a less computationally intense method of verifying transactions. Many new currencies and blockchains also use proof-of-stake methods.

A representative for Nvidia declined to comment.

Update, May 6: This story has been updated to reflect Nvidia not offering comment.

Sarah Roach

Sarah (Sarahroach_) writes for Source Code at Protocol. She's based in Boston and can be reached at sroach@protocol.com

secsecurities regulationgaming cryptogpusnvidiacryptocurrencycrypto mining
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