Nvidia, a notable computer company with a significant presence in the gaming sector, will pay a $5.5 million fine for failing to disclose that cryptomining was a significant source of revenue growth for the company.
Today, the US Securities and Exchange Commission (SEC) said that the chip designer “failed to disclose that cryptomining contributed a large portion of their considerable revenue increase” for GPUs intended for PC gaming and advertised for that purpose.
Kristina Littman, the head of the SEC’s Crypto Assets and Cyber Unit, said that Nvidia’s poor disclosures kept investors from being able to see how the company was doing in a very important market.
Impact of Cryptomining on Revenue
Nvidia declined to comment on the matter. According to the SEC, the business has also consented to a cease-and-desist order after paying the state fine. The SEC mentioned that the gaming company failed to report how cryptomining has impacted its gaming revenue in two quarterly SEC filings for Nvidia’s fiscal year 2018.
In 2018, the company saw a big rise in revenue from its gaming business. The SEC says that the company knew that these revenues were “fueled in large part by cryptomining,” but did not include this information in its public regulatory filings.
The SEC said, “These big changes in profits and cash flow were a sign of a business that can be very volatile, making it hard for investors to figure out how likely it is that previous performance will be repeated in the future.”
Also, the issue, according to the SEC, were claims made by Nvidia about the impact of cryptomining on other firms. This led the commission to say that the company’s gaming business “wasn’t hurt at all” by cryptomining.
The firm has taken steps in recent years to explain the impact of cryptomining on its business, but in its most recent financial report, it stated that it had “little visibility.”
“Volatility in the crypto market, such as changes in the value of cryptocurrencies or the methods used to validate transactions, such as proof of work or proof of stake, could make it difficult for us to predict the demand for our products.” Nvidia CFO Colette Kress said.