Nvidia pinned down for not specifying the weight of crypto mining in its growth

(BFM Bourse) – While Nvidia has since returned to greater transparency, the Californian manufacturer of high-end processors failed in 2018 to clearly explain that the growth in sales of its video game hardware stemmed from in fact largely purchases made by cryptocurrency miners. The SEC believes that the company should have better alerted investors to the potentially volatile nature of this request. The case ends with a $5.5 million fine.

Legally, Nvidia gets away with it without having to recognize or deny the conclusions of the investigation by the American financial market policeman, but at the cost of a cash payment that leaves little room for doubt on the merits of the case. . The Securities and Exchange Commission and the American technology firm have indeed reached an agreement which extinguishes the action of the agency on the aspect in question. Nvidia was accused of not having disclosed the necessary elements to allow investors to take the measure of the impact of the first major wave of interest in crypto-assets, from 2017, on its sales over the last few years. following quarters. The firm agreed to pay a fine of 5.5 million dollars to close the case, without having to declare itself guilty as permitted by the procedure in the United States.

Following an investigation, the SEC has indeed concluded that the American group had not made it clear that the crypto mining phenomenon was an important factor behind the significant growth in sales of graphics cards (GPUs) during of the year 2018. After a 1400% jump in the price of Bitcoin in 2017 and the start of the massive media coverage of the phenomenon, many people had embarked on mining, an activity requiring significant computing capacity. Many had turned to Nvidia’s graphics cards, as their originally intended ability to run games with hyper-realistic graphics also lends itself very well to computational cryptocurrency mining.

A volatile activity

However, while being visibly well aware of this effect on the demand for GPUs, Nvidia had contented itself with mentioning the growth of its “gaming” branch without detailing its origin, whereas to comply with the regulations the firm should have warned that significant income and cash flows were linked to a volatile activity.

The lack of clarity about the sudden popularity of its hardware dedicated (in principle) to gamers was all the more misleading since the company, on the other hand, had mentioned the “crypto” effect for other parts of its activity, leaving believe that for the gaming activity this did not play a significant role since this factor was not mentioned.

Nvidia’s failure to disclose adequate information “has deprived investors of critical information to assess the company’s financial condition in a key market,” said Kristina Littman, head of the cryptocurrency and cybersecurity department. at the SEC. All issuers, “including those pursuing opportunities involving emerging technologies,” must ensure that they disclose necessary information in a timely, complete and accurate manner, she said.

Guillaume Bayre – ©2022 BFM Bourse

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