[HN Gopher] SEC Charges Nvidia with Inadequate Disclosures about...
___________________________________________________________________
SEC Charges Nvidia with Inadequate Disclosures about Impact of
Cryptomining
Author : jmsflknr
Score : 239 points
Date : 2022-05-06 13:40 UTC (9 hours ago)
(HTM) web link (www.sec.gov)
(TXT) w3m dump (www.sec.gov)
| ineedasername wrote:
| Well, I know who is going to be the target of Matt Levine's next
| "everything is securities fraud" posting.
| kerng wrote:
| Interesting that the SEC didn't know while probably everyone in
| in the world knew at least since 2017 that graphics cards are
| hard to buy because of the cryptomining demand.
|
| Maybe one these things that are so obvious and hence not
| explicitly mentioned.
| singlow wrote:
| Its not about whether the SEC knew. It is about whether nvidia
| properly incorporated that knowledge into their financial
| reporting. If nvidia knew how many of its cards were going to
| crypto then they needed to properly report that as a market
| segment that has different growth profiles than the standard
| gaming market. That way analysts could evaluate their
| projections more effectively.
| [deleted]
| capableweb wrote:
| Now I'm no lawyer nor taxman, and know not a lot of laws in the
| US, but judging only by the contents of this press release, it
| seems they were charged with not disclosing that the sales were
| for cryptocurrency mining, not for doing the business in the
| first place.
|
| Which begs the question, does Nvidia have a responsibility to
| know exactly what their equipment is being used for, no matter if
| that activity is legal or not? Seems they would have to add a
| mandatory question asking "What are you gonna use this GPU for?"
| every time they sell a GPU, which seems weird (to me).
| TrueDuality wrote:
| I'm reading this the same way as others but I've got a little
| bit different context. It is the responsibility of publicly
| traded companies to disclose known risks to their investors.
| Nvidia effectively got major market growth by knowingly selling
| and presumably prioritizing sales to an target audience that is
| known to be _extremely_ volatile.
|
| It looks to me like Nvidia downplayed where their growth was
| coming from so investors (conjecture based on my own
| observations) couldn't accurately gauge the risk associated
| with their growth and that is where the SEC starts paying
| attention.
| JohnJamesRambo wrote:
| My goodness though, anyone with a brain knew the cards
| weren't going to gamers. Was this not known to the average
| investor?
|
| I guess it doesn't even matter because the $5.5 million fine
| is so laughably small for the rewards they reaped that I'm
| sure they are still laughing.
| tyrfing wrote:
| > My goodness though, anyone with a brain knew the cards
| weren't going to gamers. Was this not known to the average
| investor?
|
| If it was so obvious, why did Nvidia never say it? This is
| a quote from a transcript, and seems representative of how
| they put it:
|
| > ... I would say the large majority of the cryptocurrency
| demand [is for those] specialized products. There are still
| small miners that buy GeForces here and there, and that
| probably also increased the demand of GeForces.
|
| While it may be true that everyone knew they were lying or
| being misleading, that isn't a very good defense.
| impulser_ wrote:
| Doesn't matter.
|
| Nvidia needs to provide accurate information on revenues no
| matter if it obvious or not.
|
| AMD doesn't even report sales of semiconductors for gaming
| consoles under gaming because it's misleading.
| Xelbair wrote:
| >anyone with a brain knew the cards weren't going to
| gamers.
|
| you answered this yourself.
| kelnos wrote:
| Maybe, maybe not. But the point isn't who the products were
| going to, it's just that the explosive growth was driven by
| an unusual, unpredictable customer base, and Nvidia should
| have disclosed that future growth would be affected if the
| cryptocurrency mining landscape (something far more
| volatile than the "regular" market for GPUs) were to
| change.
|
| I agree that it seems dumb for the average investor not to
| know this, but this is just how this sort of thing works.
| lukeschlather wrote:
| What's confusing to me is I swear I've read press
| releases from Nvidia that have clearly said "we're not
| adding new GPU production capacity because cryptocurrency
| miners are creating a demand bubble that's going to pop."
| Maybe from 2019 though, so maybe they were just waking up
| to it in 2018.
| impulser_ wrote:
| They got themselves in terrible in 2018 because they had
| a lot of excess inventory from over building when the
| crypto boom happened. I believe the stock dropped 20+%
| because of this.
|
| They don't want to make that same mistake.
| jetpks wrote:
| Most people don't know what a graphics card is.
| falcolas wrote:
| > anyone with a brain knew the cards weren't going to
| gamers
|
| Gamers, and industry insiders, knew this. The general
| public (i.e. most investors) didn't. Most non-desktop
| gamers couldn't give two figs about the intricacies of the
| videocard market, they just invest in growing
| companies/stocks.
|
| Or, to put it another way, NVidia Stocks go brrr, buy.
| Nvidia stock no longer go brrr, complain.
| weird-eye-issue wrote:
| Not necessarily. There actually was significant growth in
| gaming with covid and there were lots of improvements with
| Nvidia's cards so it would be reasonable to assume most the
| growth is coming from that.
|
| Public companies need to be ahead of risks for investors.
| If they weren't mentioning crypto mining in earnings
| reports then that doesn't look good at all.
| JohnJamesRambo wrote:
| It was for 2017-2018 though.
| 7speter wrote:
| A funny thing that nvidia was rumored to have done at the end
| of last year involved them shutting down production of cards.
| It being the holiday season, people may have settled and
| bought a card at a higher price, and them stopping production
| would make the item scarcer. Thats one way to look at it, but
| I also wondered if nvidia stopped production because they
| knew that their sales and revenues and profits would all take
| a hit in q4 2022 and didn't want the decline to look
| uncontrollably drastic to investors in the earnings report
| that would come out in early 2023...
| paulmd wrote:
| That ended up being completely fake. NVIDIA revenue and
| volumes have actually been on the incline ever since 2020,
| there was no reduction in production, and this shows up
| both in their financials and in actual measurements like
| the Jon Peddie Research GPU market reports (which are the
| gold standard for this) and Steam Hardware Survey (more
| granular but perhaps less accurate numbers). They are
| actually pumping volume even more this quarter on top of
| not having reduced them as some previously predicted.
|
| > Q4'21 sees a nominal rise in GPU and PC shipments
| quarter-to-quarter
|
| https://www.jonpeddie.com/press-releases/q421-sees-a-
| nominal...
|
| NVIDIA is like Apple, there's a certain clique that really
| really hates them and is willing to make shit up and see
| what sticks, and there's a huge number of people willing to
| automatically believe the worst, because "green man bad".
| It's utterly irrational and goes far beyond the technical
| merits, people have a viscerally negative _emotional_
| reaction to these companies and it 's mostly not fact-
| based, it's just the result of two decades worth of
| fanboyism and grudges.
|
| (I expect this reply will be followed by a bunch of people
| trying to list off everything bad they think NVIDIA has
| ever done, a lot of which will have been "massaged" by that
| same clique. Like bumpgate... but AMD had tons of GPU
| failures due to bad solder bumping in the 2012 timeframe
| too, that's why "baking your GPU" was a thing for
| _everyone_. Etc etc. NVIDIA is the hillary clinton of
| companies... they 're a broadly competent competitor who
| does a decent job, but a decade worth of propaganda has
| convinced everyone that gosh, there must be _something_
| there, because I keep hearing about them!)
| 7speter wrote:
| Yep, why I pointed this out to be a rumor. The linux
| gaming community makes nvidia cards out to being total
| bricks on linux, and so far I haven't had any issues I
| could tie to exclusively using an nvidia card (it
| actually runs some older games better than the AMD I had
| before it).
| __Joker wrote:
| Yes. Everything is a securities fraud. Expect sooner or
| later(mostly after a bad quarter) may be investors would sue.
| roenxi wrote:
| This risk is the risk of people not wanting the product a
| company is selling. Philosophically speaking, it is the job
| of investors to figure that one out, not the company.
| Capitalists are meant to decide where the capital gets
| deployed and all that. Customers deciding to do things
| differently isn't the sort of operational risk that companys
| are meant to be experts in.
|
| I don't see how Nvidia can reasonably be expected to know who
| is using their graphics cards for what either. Unless they
| are actively courting a specific segment, and even then these
| things are general purpose cards.
| ineedasername wrote:
| _> Philosophically speaking, it is the job of investors to
| figure that one out, not the company_
|
| It's less about _who_ should know, and more about the fact
| that NVidia _does_ know. And, in knowing, it is obligated
| to provide accurate information.
|
| NVidia _is also_ actively courting a specific segment. They
| have introduced crypto-specific chips as well as hash rate
| limiters in GPU gaming chips, so they are clearly aware of
| how mining may be a factor in gaming GPU sales.
| grog454 wrote:
| > It is the responsibility of publicly traded companies to
| disclose known risks to their investors.
|
| Legally maybe(?) but practically this makes no sense. In the
| real world it is the responsibility of an investor to
| understand what they are investing in while maintaining
| skepticism and scrutiny of their investment. If you can't
| identify the correlation between massive gains in crypto
| value with massive gains in NVDA, you shouldn't be investing
| in NVDA.
|
| Disclosure: long NVDA
| lbarrow wrote:
| This is exactly right. You have to disclose risks to your
| business and if a really big part of your growth is coming
| from a new, volatile customer base, that's a big risk and you
| should disclose it. It has nothing to do with a specific
| requirement for GPUs or something; publicly traded companies
| _in general_ have a responsibility to understand where their
| revenue comes from and disclose that understanding to the
| public.
|
| This is very run-of-the-mill stuff for the SEC. I think the
| only reason it's getting play on HN is that, if you aren't
| familiar with this sort of thing, it looks like the SEC is
| picking on Nvidia for doing business with crypto miners. But
| that isn't what the complaint is actually about.
| deevolution wrote:
| A risk to someone else is an opportunity for others. Risk
| is very subjective here
| yunohn wrote:
| What? The premise is very clear - NVIDIA stock has seen a
| meteoric rise off hugely increased sales, investors are
| concerned that nvidia is hiding the share of sales
| attributed specifically to a new volatile demographic
| (crypto in this case).
|
| It's like if Intel had 50% of their business from Apple
| and investors wanted to predict the impact of the M1 chip
| on their sales.
| 1980phipsi wrote:
| I wouldn't say it's "exactly right" because the investors
| knew that's where the growth was coming from. Just because
| it wasn't in the 10-K doesn't mean that investors didn't
| know it was a risk.
| mpalczewski wrote:
| What's surprising to me about this, is that if you ever
| read the risk section of a 10-k it is basically a bunch of
| non sense, where they imagine every possible risk no matter
| how small a business might have. It's filled with so many
| low probability scenarios it's barely worth reading. If
| they put in a blurb about this in the risks section I'm not
| sure who would even notice.
|
| At first glance, I suspect that they just copy pasted the
| risk section from the last 10-k and this was just some
| mistake rather than an intention to deceive. Anybody who
| knew anything about the business understood that crypto
| mining was a sizable part of that demand.
| dlgeek wrote:
| And enforcement actions like these are why the 10Ks are
| full of stuff like that.
| paulpan wrote:
| The implication is how it holds for the most recent
| cryptomining cycle, since this settlement was for 2018 and
| we've definitely seen another surge in demand in 2021.
| Coupled with the chip shortage, this most recent cycle
| could well be bigger than this 2018 one.
|
| Nvidia arguably hedged their bets better this time by 1)
| releasing their cryptomining-specific versions of GPUs, and
| 2) releasing drivers that tried to cripple the mining
| performance on the GeForce 3000-series lineup. But whether
| this was done in good faith is debatable and whether they
| disclosed properlyin the eyes of the SEC will be
| interesting to see.
| garyfirestorm wrote:
| Not defending nvidia but most people who own a single gpu
| also play games and occasionally use it for mining.
| yjftsjthsd-h wrote:
| > most people who own a single gpu also play games and
| occasionally use it for mining.
|
| _Most_ people with 1 GPU use it to mine? I would have
| guessed that even with things going crazy in the
| cryptocurrency space pure gamers were a vastly bigger
| group.
| NikolaNovak wrote:
| Orthogonal to the issue at hand, but for what little it's
| worth, literally nobody I know who games is mining. And
| this includes a lot of tech-savvy IT professionals.
|
| (half a decade ago, one person I knew was getting
| excited/contemplating it; but he was looking to build a
| dedicated mining rig, and I don't think he ever followed
| up)
| jvreeland wrote:
| I think most is doing a lot of work there. No one I know
| who games or does CAD is mining crypto because it's in no
| way worth it and I imagine there's nothing but anecdata for
| your statment either.
| vmception wrote:
| > prioritizing sales to an target audience that is known to
| be _extremely_ volatile.
|
| Every crypto growth cycle is assumed (by enthusiasts) to be
| more resilient than the prior growth cycle, on the path to
| steady growth, and this has turned out to be true, with
| longer and longer steadier growth cycles, with less and less
| amplitude in the growth and troughs.
|
| in 2018 there was the same optimism, that culminated in a
| long steep crypto bear market, the longest one so far.
| Although I think it is obvious that bubbles pop, especially
| crypto bubbles, I don't think it was obvious or relevant that
| sales to miners would disrupt so immediately that Nvidia
| investors needed to know this level of nuance. miners have
| such high profit margins (if integrated properly) that steep
| declines in crypto prices shouldn't affect them, but in this
| case it did.
|
| Especially when looking at the resilience and structure of
| the mining sector now.
|
| I think this is an odd demand by the SEC, but Nvidia settled
| it for pennies so moving on.
| lettergram wrote:
| I don't think this makes sense. The SEC isn't there to protect
| the share holders, I don't know wtf this is.
|
| The only thing they could be required to disclose was the
| percent of sales THEY KNEW were being used for crypto. They
| also wouldn't be required to capture that data really. Plus
| I've been on their quarterly calls, they've been pretty open
| about their exposure to crypto so idk.
|
| This seems well beyond the scope of the SEC... imo it's their
| broader plan to go after crypto, but everyone knows they have
| no legal basis currently to do so.
| 7speter wrote:
| There's been prevalent rumors in the gaming community that
| nvidia sold complete graphics cards to mining operations. A lot
| of times its waived off as the board partners (Asus, MSI,
| Zotac, etc) and not nvidia but nvidia does sell reference (they
| call them founders edition) cards. Also there was this big
| thing in december where there were rumors of a 12gb 2060 design
| that would alleviate gamer demand but it turned out the
| whispers that came out of the rumor mill itself a week before
| the release was that those gpus were made with the top priority
| of going to miners and not gamers. When examples of those cards
| came to market they were going for ~750 dollars in january, but
| now nvidia and board partners seemingly have pie in their face
| with those cards rotting on shelves at microcenters for $389
| (the 2060 is a previous generation card and its original msrp
| was 329 in 2019).
|
| The sec may be starting an investigation from the top down to
| see if nvidia had any involvement in what they are accusing
| them of and will see what degree of complicity they and board
| partners had in all of this.
|
| Anyways I'm jumping the gun a bit there but there are distinct
| differences between cards for typical consumer uses (gaming,
| and video and machine learning workflows) and mining, and
| mining was a big part of the reason why prices were insane (a
| 3070ti which can now be found on sale for 699 was going for
| 1900+ dollars on amazon at ethereums peak) since January of
| last year until the recent gradual descent in prices.
| madeofpalk wrote:
| The relevant part from the article:
|
| > NVIDIA had information, however, that this increase in gaming
| sales was driven in significant part by cryptomining. Despite
| this, NVIDIA did not disclose in its Forms 10-Q, as it was
| required to do, _these significant earnings and cash flow
| fluctuations related to a volatile business_ for investors to
| ascertain the likelihood that past performance was indicative
| of future performance.
| macspoofing wrote:
| > does Nvidia have a responsibility to know exactly what their
| equipment is being used for, no matter if that activity is
| legal or not?
|
| In aggregate .. yes.
|
| As a company, you should know if the increase in sales for your
| product was a result of the gaming market growing, or the
| research market growing, or the crypto market growing.
|
| And as a publicly traded company, you have to communicate this
| to investors.
|
| >Seems they would have to add a mandatory question asking "What
| are you gonna use this GPU for?"
|
| They don't need to do that.
| philipwhiuk wrote:
| No they don't have requirement to know.
|
| But if they do know what their GPUs are used for and then they
| say something else, that's a problem. And that's what the SEC
| has a problem with here.
| philipwhiuk wrote:
| They probably should have said something like:
|
| x units were sold from our gaming line of products, however
| market research indicates y % of them are likely being used
| for cryptomining.
| singlow wrote:
| I don't think it is even that important whether they
| specifically enumerate the destination of the cards. The
| important thing is that they should create an honest
| projection and risk assessment. When they present their
| earnings statement they need to indicate not only how much
| they sold but how much they expect to sell in the future.
| If they knew that a large portion of cards were going to
| cryptominers then they need ed to indicate the potential
| difference in growth stability between those sales and the
| normal consumer sales.
| paulgb wrote:
| The issue here wasn't whether they should have known, but that
| they (apparently) did know and didn't disclose it. Whether
| NVIDIA has a duty to know is not at issue here, since they did:
|
| > NVIDIA had information, however, that this increase in gaming
| sales was driven in significant part by cryptomining
|
| Color me a little surprised that this is what SEC's Crypto
| Asset is spending resources on when there is such a dumpster
| fire of obvious fraud in other areas of crypto (looking at you,
| public mining companies), but I suppose NVIDIA's upswing did
| catch a lot of retail investors.
| jonathaneunice wrote:
| You're absolutely right this is the least of the crypto
| dumpster fires / fraud situations.
|
| But the official disclosures of public equity firms is one of
| the lampposts the SEC's clearly mandated to look under. In
| fact, crypto is essentially immaterial here. If NVIDIA knew
| that a huge part of their GPUs were being used for the new,
| highly-volatile fad of Quantum Fubaring instead of the gaming
| market NVIDIA'd previously disclosed was the market target,
| the SEC would still have the right and responsibility to ding
| them for deceptive or insufficient disclosures.
| duxup wrote:
| I don't think you HAVE to know, but let's say you don't know,
| now you better not make a statement like you do know in you're
| earnings report. Or if you do and you make a false statement
| ...
| gambiting wrote:
| >>Which begs the question, does Nvidia have a responsibility to
| know exactly what their equipment is being used for, no matter
| if that activity is legal or not?
|
| They are being charged not for not knowing, they are being
| charged for knowing and not disclosing it. The "knowing" part
| seems to be a forgone conclusion, or at least SEC must have
| ironclad proof.
|
| >> Seems they would have to add a mandatory question asking
| "What are you gonna use this GPU for?"
|
| No, but if they are selling thousands of GPUs to cryptominers,
| they don't need to ask to know. Same how if the US Airforce
| purchased 100k GPU chips, you can safely assume they won't be
| using them to play Fortnite, no questionnaire necessary.
| dragonwriter wrote:
| > The "knowing" part seems to be a forgone conclusion, or at
| least SEC must have ironclad proof.
|
| The SEC doesn't need ironclad proof for a civil fine. The
| standard is preponderance of the evidence, not beyond a
| reasonable doubt.
| cjbgkagh wrote:
| I wonder if they're using the GPUs in radars.
| erikerikson wrote:
| The Airforce has flight simulators and other video games for
| which it must use GPUs. Additionally there are ML models to
| build and so on. Of the things I would predict, crypto mining
| would be the least of them.
| gpderetta wrote:
| I don't think the parent was implying they were.
| erikerikson wrote:
| > Same how if the US Airforce purchased 100k GPU chips,
| you can safely assume they won't be using them to play
| Fortnite, no questionnaire necessary.
|
| My intention was to gently counter this statement. I took
| Fortnite as a proxy for video games and I meant to add to
| the conversation that it does use video games. For a
| while the military was even publishing video games.
| gambiting wrote:
| Of course, but when you are disclosing your business
| activities, selling to the military is a pretty major thing
| to mention, no? You wouldn't just lump it all under
| "gaming", because your gpus _might_ be used to play video
| games.
| erikerikson wrote:
| I accept lower salaries to never have to care about
| reporting to the SEC. The lost revenues are offset by
| doing work that matters.
| stjohnswarts wrote:
| I think it's ridiculous. I think if the government wants you to
| "declare" something they need to make it explicit and how
| important that is to "declare". This is probably just someone
| in that department trying to get their name in trade rags in
| order to get a promotion.
| vondur wrote:
| Heck, they modified their driver software to make reduce
| bitcoin mining efficiency.
| jcranberry wrote:
| The issue is that they knowingly misinformed their investors.
|
| >In two of its Forms 10-Q for its fiscal year 2018, NVIDIA
| reported material growth in revenue within its gaming business.
| NVIDIA had information, however, that this increase in gaming
| sales was driven in significant part by cryptomining.
| spamizbad wrote:
| You have to disclose what you know. It's fine to say "We know
| people are buying them, but we do not have metrics as toward
| their use" assuming that's a factually true statement (your
| business does not collect metrics from sales channels or
| consumers giving you an indication toward their use). A
| terrible way to run a business, but legal!
|
| However, if your data indicates that most of your revenue
| growth is likely due to crypto mining and you turn around and
| tell investors it's because of gaming, you are lying and
| misleading your investors.
| tfehring wrote:
| NVIDIA is required to monitor material risks to its business
| and disclose them to shareholders. I think in theory the reason
| for that requirement is so that unsophisticated retail
| investors don't buy the stock and then lose a bunch of money
| due to risks they didn't anticipate, though it feels pretty
| quaint to expect retail investors to read Forms 10-Q.
|
| Importantly, they _did_ (according to the press release) know
| that a big part of their sales growth was from cryptomining. I
| have no idea how they measured the magnitude, but miners weren
| 't exactly quiet about scooping up graphics cards.
| sokoloff wrote:
| > it feels pretty quaint to expect retail investors to read
| Forms 10-Q
|
| It's not that there's an expectation that retail (or any
| given) investor reads the 10-Q; it's sufficient that there is
| a standardized way to publicize that information and, if you
| lose money because you _didn 't read_ the readily available
| information, well, you're an adult who can make investment
| decisions on whatever criteria you want and that's on you.
| senko wrote:
| > [any public company] is required to monitor material risks
| to its business and disclose them to shareholders
|
| This basically means everything is securities fraud: https://
| www.bloomberg.com/opinion/articles/2019-06-26/everyt...
|
| The parent question still stands: why would NVIDIA need to
| police how their products get used? They're not manufacturing
| weapons or drugs.
| gpderetta wrote:
| They do not need to police it. But how their products are
| used has an impact on the growth of the company as it can
| affect future demand; it appears that if the company has
| this sort of knowledge it is supposed to disclose it to
| investors.
| singlow wrote:
| Right. And not just disclose it as a fact, but
| incorporate it into their projects and risk outlooks.
| Retric wrote:
| No, the requirement isn't perfection but NVIDA is charged
| with failing to disclose significant risk that they where
| aware of.
| JackFr wrote:
| They don't need to police how their GPU's are being used.
|
| They simply need to release fiancial statements which
| accurately reflect material information they know.
|
| That securities law can be abused unscrupulous profit
| seeking lawyers is not news, and isn't really germane to
| this case. The issue at hand was disclosing information
| essential to financial results rather than fanciful
| hypothetical risks.
| VWWHFSfQ wrote:
| > NVIDIA did not disclose in its Forms 10-Q, as it was
| required to do, these significant earnings and cash flow
| fluctuations related to a volatile business for investors
| to ascertain the likelihood that past performance was
| indicative of future performance.
|
| Basically they were dishonest about the nature of the
| business that was driving the short term growth.
| senko wrote:
| > NVIDIA did not disclose [...] for investors to
| ascertain the likelihood that past performance was
| indicative of future performance.
|
| I mean, who am I to argue with SEC, but "past performance
| is not indicative of future results" should be firmly
| planted in the minds of everyone remotely capable of
| understanding the 10-Q.
|
| To me this seems like it was a "hey, you should
| definitely split out crypto earnings in your gaming
| division" with a slip on the wrist. Doesn't sound like a
| big deal.
|
| And going on the tangent, who says earnings due to crypto
| are more risky than earnings due to gaming? There's been
| a dearth of new AAA titles and due to the inflation
| gamers may very well delay their PC upgrade. Sounds as
| risky as miners to suddenly stop buying equipment, and
| faster than what the hardware-hungry gaming crowd can get
| their hands on.
| Robotbeat wrote:
| Actually... You could potentially consider a GPU an arm
| subject to EAR/ITAR regulations. EAR/ITAR are overly broad
| (in a way that could be unconstitutional), so I wouldn't
| rule it out. https://wccftech.com/us-government-bans-intel-
| nvidia-amd-chi...
| ineedasername wrote:
| Public companies have a responsibility to disclose any known
| risks that are material to their performance.
|
| It could be argued that they don't have a responsibility, or
| only a limited one. But in this case they really can't that
| they're actually unaware of it's use for mining. It's not
| necessary on an individual person-by-person basis, they know
| that a substantial amount of hardware is used for it.
|
| Perhaps they don't know _exactly_ how many or what %, but a
| little bit of market research-- over an issue highly material
| to their bottom line-- would be expected (and was probably
| done, but maybe they 're bad at their jobs). At a minimum it's
| trivial to see that sales are correlated to the crypto market.
|
| Also AMD managed to note the risk in its own 10-Q filings.
| cc1616 wrote:
| Naive question: What does Nvidia have to gain from not accurately
| disclosing this information?
| y04nn wrote:
| By not disclosing it they hide the fact that their core
| business growth may be at risk in case of a cryptocurrency
| crash. And they may know that if they sell directly to crypto
| miners.
| philipwhiuk wrote:
| Maybe more investment. If you're an investor who thinks crypto
| is a flash in the pan whereas gaming demand is likely more
| permanent, if you are told the growth is gaming, not crypto,
| you'll be more likely to invest.
| tejohnso wrote:
| They could state, or imply, that their sales growth is due to
| an increased demand in their core business. Which may be
| considered much better than the increased demand coming from a
| secondary, highly volatile, and potentially highly regulated
| business.
| duxup wrote:
| It could be an actual mistake.
|
| On the other hand I know Nvida and others are sensitive to how
| they're perceived by non crypto folks and would / could even
| accidentally try to downplay how much the price / sales are
| driven by crypto.
|
| But you really shouldn't do that in an earnings report.
| mrtweetyhack wrote:
| jpalomaki wrote:
| " NVIDIA had information, however, that this increase in gaming
| sales was driven in significant part by cryptomining. Despite
| this, NVIDIA did not disclose in its Forms 10-Q, as it was
| required to do [...]"
|
| That seems to be main issue - they knew, but did not disclose.
| xiphias2 wrote:
| Additionally Jensen Huang was specifically asked about it in
| the quaterly call and said that it wasn't significant part of
| the demand from that quarter. It made a lot of investors angry,
| as it was a very strange statement that didn't really make
| sense.
| ticklemyelmo wrote:
| They didn't disclose that information that everyone even
| vaguely involved in the tech and gaming industry knew!
| citizenpaul wrote:
| Its good the SEC is investigating poor disclosures. You know
| rather than the rampant fraudulent activity happening all across
| their supposed purview.
| zzleeper wrote:
| I just bought an RX 6600, for about $320. It's definitely not the
| latest GPU, not even close, but it made me realize something:
|
| Because of the GPU shortage, game makers couldn't rely on enough
| users having the best/latest card, so now there is not much point
| in having, say, a RTX 3090, where a 3080 performs as well for
| most non-mining purposes.
|
| Now, what if crypto enters a crisis (or ETH switches to PoS,
| which is less likely), and then the next generation of GPUs has
| almost no demand at the inflated triple-digit prices. That's
| going to be a huge hit to its market cap
| vmception wrote:
| > and then the next generation of GPUs has almost no demand at
| the inflated triple-digit prices. That's going to be a huge hit
| to its market cap
|
| NVIDIA ('s distributors) still sale at the lower MSRP (right?)
| so the risk for them is people not buying them at all, which
| seems more farfetched
|
| maybe I'm wrong, but I thought the true price was shown by what
| scalpers could fetch, which means the places the scalpers buy
| from had the wrong lower price
| Havoc wrote:
| >game makers couldn't rely on enough users having the
| best/latest card
|
| Yup. Built a rig (2070S/3700X) just before covid/shortage
| kicked off and it has been holding up suspiciously well two
| years later - likely due to that effect.
|
| 3 year old card and no immediate need for an upgrade in sight.
| mtoner23 wrote:
| Eth is switching to PoS https://ethereum.org/en/upgrades/merge/
| dehugger wrote:
| When? The time frame on that page is "eventually" which more
| or less equates to "perhaps, someday". Until a date is
| committed to and the merge actually occurs Ethereum proof of
| stake will never be taken seriously.
| okwubodu wrote:
| There's more than 25 billion on the line with the merge so
| it's not like they're stalling for fun.
| tromp wrote:
| Probably sometime in the next 5 years...
| onphonenow wrote:
| Umm, wasn't this super well known? Every enthusiasts website had
| tons of tracking of card prices which were high because of...
| cryptomining.
|
| I mean, really entry level folks knew this.
|
| When crypto prices would go down a bunch of articles would pop up
| saying, hey, maybe supply for gaming will go up.
|
| I read these risk sections and 80% of the stuff is so overblown,
| boilerplate, repetitive, well known etc that it loses its
| usefulness.
| xxpor wrote:
| This was from 2018, before card prices really exploded.
| onphonenow wrote:
| That is a key point then ok.
| boredumb wrote:
| Just wait till the feds find out that my "gaming" card has been
| used extensively to train pytorch models. Book um danno!
| reaperducer wrote:
| _Just wait till the feds find out that my "gaming" card has
| been used extensively to train pytorch models. Book um danno!_
|
| Are you telling your investors that you're using your gaming
| card for games, and then using it for pytorch models?
|
| Remembering that this is the SEC, not the FBI, gives you a lot
| of context.
| selimthegrim wrote:
| But Agent, I started my rig up at 8:00 am that morning, not
| 8:01 am like the power company records say...
| boredumb wrote:
| For starters it was a joke, but the SEC is still a federal
| agency, for joke context.
| FollowingTheDao wrote:
| Gaming, yeah, that's the problem, not the environmental damage...
| stjohnswarts wrote:
| Nvidia is now Big GPU? lol
| jenny91 wrote:
| NVIDIA knew a lot of their GPUs were bought for crypto mining,
| but attributed those sales instead to growth in gaming,
| potentially misleading some investors (maybe they wanted to
| invest in gaming, not the very volatile crypto industry).
|
| This is the SEC doing their job, giving a public company a
| reminder to be honest about their disclosures. The fine is
| insignificant and nobody is in trouble.
|
| It has nothing to do with whether people could've read between
| the lines, whether NVIDIA has a duty to know what their products
| are used for, or anything like that. Just that they knew what was
| going on and told a small lie to bolster their finances. You
| should be able to read company financial disclosures and trust
| them.
| paulmd wrote:
| AMD and NVIDIA's numbers for crypto sales have always been
| dodgy. Like in 2017-2018 I think they said that crypto sales
| (including gaming cards used for crypto) made up like 5% or 10%
| of their revenue, which is total bullshit. I assume they had a
| range of potential numbers internally (there is always a range)
| and they picked the lowest possible number to avoid spooking
| investors.
|
| There is very very little gaming demand for these cards at 2-3x
| MSRP. Yeah, there's a few, but not many. As mining demand has
| tapered off this quarter, you've seen prices absolutely
| plummet, and if there was truly organic gaming demand for cards
| at those prices, that wouldn't have happened.
|
| When prices get super elevated (that 2-3x MSRP range), IMO the
| realistic number is at least 30% if not more like 50% of total
| sales are crypto-related.
|
| Some caveats:
|
| bear in mind that OEM sales are a huge thing. Something like
| half the cards on the market will never even hit a distribution
| channel. So even if nearly-100% of _aftermarket_ sales go to
| miners, there 's a significant number being moved in prebuilts.
| That said, at the height of crypto mania, miners will buy
| prebuilts and strip them of their GPUs and resell them on
| ebay/craigslist/facebook, so OEM sales are not 100% crypto-
| unrelated either.
|
| I am taking that into account when I am guessing 30-50% - I
| think the number for _retail_ sales are >75% if not >90% miner
| sales when that happens, and it's really only the OEM sales
| that hold things down to 30-50%. There are _very few_ actual
| _consumers_ willing to pay the $2400 that 3080s were going for
| at their peak, that 's _triple MSRP_ , and prices immediately
| plummeted when the LHR was created, because prices are driven
| by hash rate and expected crypto profit, not gaming sales.
|
| AMD more or less didn't participate in crypto this time around
| though, because they simply didn't make any GPUs. 6800 and
| 6700XT are reasonably competent miners - about 3060 Ti/3070
| performance, which is undesirable in a _relative_ sense
| compared to Ampere and RDNA1 but that 's still twice the
| hashrate of a RX 480, miners still use those cards very
| happily, and RDNA2 is more efficient because it's 7nm. But it
| took over a year after launch for the first RDNA2 card to show
| up on the Steam Hardware Survey - at 0.15% marketshare.
| Meanwhile Ampere was around 10% marketshare at that time. You
| can go back and look at the historical Steam results using the
| Wayback machine, or here's a contemporary article (you don't
| have to like Tom's, the numbers are from Steam):
|
| https://www.tomshardware.com/news/rtx-3090-outsells-all-rx-6...
|
| (If anything this probably understates it since miners did go
| after NVIDIA cards preferentially. It's likely more like a
| factor of 20x in total shipments, vs the Steam numbers. I guess
| that's where you go to the JPR numbers tho.)
|
| Basically, AMD did not make hardly any GPUs because console
| sales were unexpectedly high and those contracts got first
| priority, at one point there were reports that console sales
| were eating 80% (!) of AMD's wafer supply. The remaining wafers
| went to CPUs since even a consumer CPU is ~10x more profit per
| wafer than a GPU - it makes complete sense to maximize their
| revenue on the remaining wafers after consoles got the lion's
| share.
|
| https://www.hardwaretimes.com/in-q4-amd-supplied-a-total-of-...
|
| RDNA2 was the paperiest of paper launches. They delayed it as
| long as they could, and did a token paper launch to satisfy
| investors. I think the term "paper launch" is overused - it
| doesn't mean "I can't buy one on launch day" or even "I can't
| get one the first month" - Pascal took 6 months for inventory
| to normalize, 1080 was unobtanium until about November 2016 and
| even the 1070 was hard to get for a few months. Someone I know
| used the term "holodomor launch" at the time (cringe). But
| RDNA2 was a true paper launch, in the sense of only existing to
| satisfy commitments made to investors. AMD had no intention of
| producing serious quantities of it when they could be making
| 10-50x the money per wafer selling CPUs (and wafers are their
| bottleneck scaling profit). 6700XT and 6600XT/6600 were the
| only cards that shipped in any volume and those lower-end cards
| didn't launch until almost a year after the initial RNDA2
| cards.
|
| Not saying that wasn't the right decision in a financial sense,
| of course. Investors want them to make money, and AMD was very
| very wafer-bottlenecked. But the GPUs were launched just to say
| they launched.
|
| But in a backhanded way, that was a good strategy this time
| around. No GPUs manufactured means very little crypto exposure.
| That's one solution to crypto boom-and-bust I guess - find a
| new market and don't sell GPUs anymore. NVIDIA is very, very
| subject to the boom/bust cycle of crypto and unlike AMD or
| Intel they don't have diversity of other products to smooth
| things out (not just other segments like enterprise/automotive,
| but other _products_ like CPUs and mobile SOCs, etc).
|
| AMD did participate last time though, and they had a huge
| inventory overhang that took almost a year to clear just like
| NVIDIA did. Not sure where people got the idea they didn't, but
| they discussed it openly in their late-2018 and early/mid-2019
| financials calls... Here's a random one from that period I
| pulled up, ctrl-f "inventory" and look for yourself.
|
| https://www.fool.com/earnings/call-transcripts/2019/01/30/ad...
|
| Also, the bit about "NVIDIA selling cards directly to miners!"
| ended up being fake and based on tech media wildly
| misinterpreting a paywalled RBS article (that none of them
| wanted to pay for lol) that used an estimate of crypto network
| hash growth to estimate crypto gpu sales... after some
| massaging the line "miners bought $175m of NVIDIA GPUs based on
| hashrate estimates" became "NVIDIA sold $175M of their GPUs
| directly to miners outside retail channels" which simply isn't
| true.
|
| Fake spin: https://www.kitguru.net/tech-news/featured-
| announcement/leo-...
|
| Actual article:
| https://twitter.com/dylan522p/status/1332502890104188929
|
| This is a great example of what I reference elsewhere in the
| thread, about how there's a clique that likes to manufacture
| fake or marginal rumors about NVIDIA, because a lot of people
| have viscerally negative emotional reactions to NVIDIA and it
| gets a lot of attention and clicks.
|
| Mining card sales (not _gaming cards used for mining_ , but
| actual dedicated mining cards) were a thing, but a very small
| thing overall (I'd guess less than 5% revenue as a segment,
| with gaming running around 50%). And many mining cards are
| still sold through partners or OEMs like HP... I used to see
| the EVGA cards coming through b-stock back in 2019.
|
| Now in contrast _partners_ were absolutely selling gaming cards
| in bulk direct to miners. Miners pay a premium for access to
| the cards, and partners require them to give up their
| warranties, so it 's an advantageous deal for them, but as far
| as I know NVIDIA does not sell direct.
|
| Just some baseline stuff that I often see come up in the
| nvidia/crypto discussions that is wrong, tried to source as
| much as I can.
| caymanjim wrote:
| That's a lot of words and a lot of numbers that you appear to
| have pulled out of thin air.
| anonymous0099 wrote:
| Some gamers with high-end cards are likely doing a bit of
| mining. If the parents or dorms are picking up the
| electricity bill, that makes sense. And then there are some
| cards that are used for gaming and to study deep learning, I
| guess. It is likely a bit more of a mixed use of compute than
| just pure mining.
|
| To give an example, I'm not a student, but I do have a box
| with 2 x RTX 2080 sitting in my garage, which I use for
| hobbyist deep learning research. Sometimes, I also need
| heating in my garage, it gets cold during the winter. It was
| pretty easy to flash a NiceHash usb stick. So I boot it from
| it and it becomes a 1.5kW heater which pays for itself. Not
| particularly efficient or climate friendly, but oh well.
| paulmd wrote:
| > Some gamers with high-end cards are likely doing a bit of
| mining. If the parents or dorms are picking up the
| electricity bill, that makes sense.
|
| Yeah, I think a good number of gamers who bought cards are
| mining on them in their spare time as well. I'm counting
| that as a gaming sale since it's primarily for gaming
| rather than someone who set out to buy 10 cards and build a
| mining rig, but I do think a lot of people did the "well,
| I'll mine on it when I'm not using it and it'll soften the
| blow a bit..." approach.
|
| And you don't even need free electricity, the cards were
| and are still profitable, just not profitable enough
| (anymore) to gamble $10-20k setting up an industrial-style
| mining rig with a full loadout of cards. If you have the
| card anyway (because you game/train AI/etc) then it's still
| worth mining.
|
| I question how many people cashed out regularly though,
| there may be a lot of people sitting with a bunch of paper
| profits from their gaming card...
|
| > And then there are some cards that are used for gaming
| and to study deep learning, I guess. It is likely a bit
| more of a mixed use of compute than just pure mining.
|
| I think that's a small market in general, there's not
| millions and millions of those people and they're not
| setting up hundreds of rigs with thousands of cards, but
| yeah definitely, that exists. I know people who bought a
| quad-1080 ti or quad-3090 rig and used it for
| gaming/DL/homelab and mined on it when they weren't using
| it.
|
| It was perhaps a little less appealing this gen since there
| was never a proper Titan - the 3090 is still locked down in
| certain types of operations, not just FP64 but also some
| data types/operations that iirc might be relevant to DL
| users. bfloat16, and some types of FMA operations, or
| something like that? But lots of people can work around it
| or it isn't relevant to the thing they wanted to do, there
| are still a decent number of DL/homelab people who will buy
| it. It's again, not a gigantic market, but it's there.
|
| imo with the way prices stacked up - it was $2400 for a
| 3080 or $3000 for a 3090 on ebay, and it was actually
| possible sometimes to get 3090s at decent prices ($2000)
| from partners (Zotac, EVGA, etc), where it wasn't really
| possible to ever score a 3080 from partners due to extreme
| levels of demand. So you could score a retail 3090 for
| cheaper than an ebay 3080, and actually even at ebay
| pricing, if you're going to spend $2.4k on a GPU
| _anyway_... just spend the last $600 and get the extra
| VRAM. 10GB is going to noticeably shorten the viable
| lifespan of the card anyway.
|
| Given the pricing, it made a lot of sense imo to aim for
| the 3090 over the 3080, both for homelab/DL type stuff, and
| honestly also because the 3080 had a very stingy amount of
| VRAM out of the box even for gaming. I know the technical
| reasons (yield, memory bus width, etc) that make this
| complicated, but I'd really liked to have seen 12GB on the
| original 3080, if not 16GB. I think GDDR6X was a mis-step
| in a lot of ways and they would have been better off with a
| conventional 512b bus with GDDR6 instead of a super-fast
| 384b bus with GDDR6X... but that also complicates routing
| and board design.
| lostmsu wrote:
| Case in point: I do all of the above. These RTX cards are
| marvelous.
| johnwalkr wrote:
| > There is very very little gaming demand for these cards at
| 2-3x MSRP
|
| Anecdotally, I know 10 or so people that paid 2x+ for RTX3000
| series cards and zero that are mining. A lot of people my age
| (about 40) got back into PC games for something to do during
| the pandemic.
| dubcanada wrote:
| Are you big in the crypto world? Cause one miner buying 250
| cards matters a lot more then 10 gamers buying 1 each.
|
| Also miners are typically buying the best card per a price
| point, which tends to be higher end or datacenter cards.
| Your average gamer is usually buying a medium tier.
|
| The price point is also completely indifferent.
| paulmd wrote:
| Anecdotally I know a lot of people who are too ashamed to
| admit they're mining on it in their spare time but know
| that leaving a money printer that makes $5 a day sitting
| idle is stupid. ;)
|
| (even today, a 3090 is still profitable even with absurd
| $0.30/kWh electricity or whatever - if you are around the
| national average of 10c they're still doing like $3 a day.
| Not "buy 10 of them and build a rig" profitable anymore,
| but at the peak they could do ~$11 a day after electricity
| and for a long time they were $5 a day after electricity.
| Pre-LHR 3080s were a beast too, almost the same hashrate as
| a 3090.)
|
| Anyway the backlash against mining and miners in the 2021
| timeframe was real and intense. I'm not saying there aren't
| legitimate reasons - it's a waste of electricity, it's
| screwing up the market for everyone else, etc - but I think
| a huge number of gamers who bought cards in the 2020-2021
| timeframe mined on them when they weren't using them and
| just don't want to admit it.
|
| Unfortunately, crypto is a memeplex, it's like a
| corporation, it's a self-reinforcing _living entity_ that
| supports itself (maintains homeostasis) through a series of
| rules and incentives, and now that it 's been created it
| can't be easily killed. Every individual is financially
| incentivized to keep playing their part, so everyone would
| have to collectively agree to not make money by taking
| part, and as people fall out the incentives become steeper
| and steeper to participate. Would you mine on your card for
| $100 a day? $1000 a day?
|
| Even if you pulled the plug on the exchanges, crypto is far
| enough along that it would be self-sustaining simply based
| on the black market. And the existence of PoS paradoxically
| makes it impossible to ever kill the PoW coins, because
| they can be traded on decentralized exchanges even if the
| real money exchanges ban them.
|
| We will just have to live with destroying our planet,
| because now that it's been created it's virtually
| impossible to kill. That was the whole point. With
| apologies to _Alien_ : it's biologically engineered to be a
| survivor... the perfect predator (of certain other
| memeplexes).
| im3w1l wrote:
| There are few miners so it's unlikely you would know one.
| But every miner buys a ton of cards, so even though there
| are few of them it matters a lot.
| thereddaikon wrote:
| My only problem here is once again the fine is meaningless.
| $5.5 million is couch change for Nvidia. The fines are supposed
| to deter these actions. This has no effect whatsoever.
| nickff wrote:
| Fines against public companies are among the least effective
| deterrents I can possibly imagine. The officers make the
| mistake/misrepresentations, and the shareholders take the
| hit. If the government really wanted to deter these actions,
| they'd fine the officers making the 'wrong' statements.
| omegalulw wrote:
| This is a terrible idea. Mistakes of this magnitude are
| often the result of multiple people making mistakes - so
| blaming a specific person is wrong.
|
| Not to mention that this would force a culture of
| attributing blame to individuals which is toxic, encourages
| people to hide mistakes and when mistakes happen the first
| thing everyone would scramble to is to find a scapegoat.
| This is objectively worse for both the company and the
| shareholders.
|
| The right approach for the government is to appropriately
| penalize the companies. The right approach for companies is
| to put in processes that make sure no single person is even
| in a position to make mistakes like this.
| nickff wrote:
| > _" The right approach for the government is to
| appropriately penalize the companies."_
|
| The government isn't penalizing the companies, it's
| penalizing the shareholders, who are the ones that
| suffered the inadequate disclosures!
|
| > _" Mistakes of this magnitude are often the result of
| multiple people making mistakes - so blaming a specific
| person is wrong."_
|
| Then either split the fine amongst the responsible
| parties, or just issue some sort of order that requires
| changes (such as some sort of audit) without a fine. If
| you can't find any specific person who did something
| clearly wrong, it's probably best to avoid blaming 'the
| company' (which is just a collection of individuals).
| yywwbbn wrote:
| What makes you think the SEC can find the 'guilty'
| parties and that the company (i.e. possibly the very same
| people) would willingly cooperate with them and not just
| find a scapegoat to push under the bus? And just repeat
| this process every time something bad happens.
|
| The point of the fine is to disincentive the company (and
| also other companies) from doing the same thing again,
| unless criminal behavior (i.e. fraud) was involved that's
| purely an internal matter for the company (they may fire
| the people who supposedly did this or do whatever they
| think is necessary).
| nickff wrote:
| If the SEC or DoJ can't figure out who's done something
| wrong, they should probably refrain from any prosecution.
| I am not sure what the 'point of the fine' is, but it
| seems like most companies just treat it as a cost of
| doing business, that they pay before moving on with
| whatever they were doing.
|
| If you think it's difficult to figure out who did what
| wrong, and that the companies are just scapegoating
| people, then the SEC implementing fines that cause the
| company to fire people is likely causing unjust firings.
| credit_guy wrote:
| That's not entirely true. A fine from a regulator, no matter
| how small, contains the threat that a much bigger punishment
| will come if you are a repeat offender. That includes trading
| suspensions:
|
| https://www.sec.gov/files/tradingsuspensions.pdf
|
| https://www.sec.gov/litigation/suspensions.htm
| dsr_ wrote:
| The fine should be proportionate to the severity of the
| offense and the magnitude of the misbegotten gains.
|
| In this case, the severity was fairly low: they didn't lie
| about what they were selling or how much they were selling,
| but they did purposefully omit some material information
| about their customers. If you were convinced that
| cryptocurrency is the future, then NVidia not mentioning
| cryptominers should have reduced your forecast of their
| earnings. If you were convinced that cryptocurrency will die
| any day now, then NVidia's omission should have increased
| your forecast for them.
|
| But how much money did people lose? It's hard to say. This
| should be enough money that NVidia's investor relations
| people make sure not to do it again, but not so much money
| that NVidia can't recover.
|
| In a hypothetical where NVidia told lies in order to
| manipulate its stock price, a much much larger fine should be
| levied.
| mgh2 wrote:
| What about AMD?
| ineedasername wrote:
| AMD properly noted potential volatility due to cryptocurrency
| mining their SEC filings. [1]
|
| _> The demand for our products depends in part on the market
| conditions in the industries into which they are sold.... for
| example, our GPU revenue has been affected in part by the
| volatility of the cryptocurrency mining market...If we are
| unable to manage the risks related to the volatility of the
| cryptocurrency mining market, our GPU business could be
| materially adversely affected._
|
| That's from their most recent one, but similar statements are
| in prior ones as well.
|
| [1] https://ir.amd.com/sec-filings/filter/quarterly-
| filings/cont...
| paulmd wrote:
| NVIDIA noted it too. This is about their earnings calls
| where they gave estimates of the _magnitude_ of the crypto
| sales, and did what I consider (and really, most people who
| looked at it seriously) to be a massive massive undercount,
| by a factor of like 3-10x.
|
| AMD was underselling it too though (in 2017-2018 it was a
| huge factor, not so much this time) and they had a huge
| inventory overhang lasting years as well... ctrl-f
| "inventory" in their late-2018/early-2019 earnings call
| transcripts.
|
| https://www.fool.com/earnings/call-
| transcripts/2019/01/30/ad...
| ineedasername wrote:
| It is not about the earnings call. The SEC notice
| specifically cites 10-Q filings in 2018 as the reason for
| their action. Earning calls may have been deficient as
| well, but it's their filings that got them in trouble.
|
| Earnings calls are not intended to be anywhere near as
| comprehensive as a Q-10 filing. They will typically last
| a shorter time that it would take to merely read the Q-10
| itself. Further, earnings calls are not a legally
| mandated requirement, some companies may not have them at
| all. This makes them less susceptible to SEC scrutiny.
|
| As for AMD, they were making similar comments to what I
| quoted above in their 2018 filings, NVidia was not. AMD
| downplayed it a bit in an informal non-regulated setting
| but gave better information in the 10-Q does. For
| NVidia's 10-Q, it was barely a mention that some earnings
| were impacted crypto, and they did not (per the SEC & a
| quick read through of their 2018 10-Q's) sufficiently
| note that it's gaming _growth_ was still driven to a
| material extent by crypto, thereby exposing them to even
| more downside risk than what had already occured.
| TedDoesntTalk wrote:
| AMD may have disclosed it in their financial statements.
| KennyBlanken wrote:
| Did AMD attribute sales to growth in gaming, not crypto?
| pigtailgirl wrote:
| Section 17(a)(2) and (3) of the Securities Act
|
| "(2)to obtain money or property by means of any untrue statement
| of a material fact or any omission to state a material fact
| necessary in order to make the statements made, in light of the
| circumstances under which they were made, not misleading; or
|
| (3)to engage in any transaction, practice, or course of business
| which operates or would operate as a fraud or deceit upon the
| purchaser."
| someguydave wrote:
| Sounds like a pretext to begin regulating tech like finance.
| duxup wrote:
| No this is just a run of the mill dorked up quarterly earnings
| disclosure.
| JackFr wrote:
| a $5 million fine with no admission of wrongdoing on a company
| with quarterly revenue > $7 billion? This is barely a wrist
| slap.
| someguydave wrote:
| I agree, it seems like a waste of everyone's time, unless the
| government was executing some nefarious agenda.
| frenchy wrote:
| > some nefarious agenda
|
| Like requiring that publicly own companies disclose known
| sources of income?
| KasianFranks wrote:
| [deleted]
| birracerveza wrote:
| I'm the first one to complain about "crypto bad" articles, but
| this is simply related to crypto mining, nothing else. It's
| sure to attract the crypto detractors crowd to complain about
| how crypto is destroying the environment, though.
| microtherion wrote:
| Even an investor who has full faith in the crypto industry
| might not want to invest in a company deriving significant
| revenue from selling GPU mining hardware, because if the
| long-announced switch of Ethereum from proof of work to proof
| of stake ever happens, that revenue might drop massively, as
| other chains seem much smaller and/or less lucrative:
| https://whattomine.com
| tejohnso wrote:
| > NVIDIA agreed to a cease-and-desist order and to pay a $5.5
| million penalty.
|
| So roughly 0.02% of last year's revenue. Basically a warning, I
| guess.
| ergocoder wrote:
| If anything, Nvidia shouldn't have paid anything.
|
| The wrongdoing here is just so strange and on the fence.
| throwme_123 wrote:
| Not a major crime though... if any at all.
|
| They sell gaming cards, does not matter what game you play
| (even the mining coin game).
| jokoon wrote:
| I wonder if there is a conspiracy of big GPU trying to promote
| crypto currencies.
|
| Although I wonder if you can absorb the cost of an expensive
| GPU+power bill by reselling bitcoins, because I'm not sure it's
| profitable.
| omginternets wrote:
| I'm intrigued by the fact that the press release focuses on
| cryptomining, specifically, but also suggests that the issue has
| to do with fiduciary duty. Would Nvidia have been charged if they
| had failed to disclose a similar volume of sales to, say,
| scientific research labs?
|
| In other words, is this about the US's policy towards (foreign?)
| crypto operations, or is it "just" about nvidia's investors?
| duxup wrote:
| Legally, yes it would be the same situation. If they were
| tracking research labs buying product and then got something
| wrong about it on their disclosure they'd be in the same
| situation.
|
| Legally it is all about the disclosure.
|
| Conspiracy minded crypto super fans might find it hard to
| believe but ultimately this is a small slap for a dorked up
| disclosure that can be easily avoided by Nvidia. The amount of
| crypto related purchases could be 100% and as long as Nvidia
| doesn't dork up disclosing that (or even saying what they know
| accurately) nothing happens here.
| omginternets wrote:
| Yeah, that was my lay impression as well. The fact that it's
| crypto seems largely immaterial, except maybe insofar as it's
| a risky market.
| Barrera wrote:
| This seems to be the crux of the case, which the document
| clarifies has been settled:
|
| > In two of its Forms 10-Q for its fiscal year 2018, NVIDIA
| reported material growth in revenue within its gaming business.
| NVIDIA had information, however, that this increase in gaming
| sales was driven in significant part by cryptomining. Despite
| this, NVIDIA did not disclose in its Forms 10-Q, as it was
| required to do, these significant earnings and cash flow
| fluctuations related to a volatile business for investors to
| ascertain the likelihood that past performance was indicative of
| future performance. The SEC's order also finds that NVIDIA's
| omissions of material information about the growth of its gaming
| business were misleading given that NVIDIA did make statements
| about how other parts of the company's business were driven by
| demand for crypto, creating the impression that the company's
| gaming business was not significantly affected by cryptomining.
|
| Some commenters are asking where the line gets drawn for the
| responsibility of disclosure. From this document, the SEC is
| saying that if material risks are known and not disclosed, that's
| a red line they will take action on.
| bodhiandphysics wrote:
| Note that this is the announcement of a settlement. Nvidia agrees
| to pay 5.5 million, agrees to state the risk, and doesn't admit
| to fault. No one is in serious trouble... nvidia should have
| indicated the risk, and didn't... (probably because someone in
| legal fucked up). It's not like investors didn't know this was a
| risk!
| danuker wrote:
| > probably because someone in legal fucked up
|
| Isn't there a list containing every risk in the world, that one
| can paste into the form? Would that suffice?
| drc500free wrote:
| Exactly. This is a light slap on the wrist for not including a
| two sentence blurb in the "risk factors" section that no
| sophisticated investor relies upon. But as a public company,
| they are supposed to make things clear for unsophisticated
| investors.
| KennyBlanken wrote:
| No, it's for attributing the sales to gaming industry growth,
| not more volatile crypto.
| albertshin wrote:
| In reality though I wonder how many of the "unsophisticated"
| investors have even opened a 10-K before investing... Let
| alone know what it is...
| whywhywhywhy wrote:
| If running a GPU 100% to mine crypto is a problem, why wouldn't
| running the same GPU at 100% to simulate a virtual cowboy world
| not be a problem?
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