NVIDIA Sued for Inflating Gaming Division Revenue in 2017 Due to Cryptocurrency Mining

Everyone remembers the infamous graphics card shortage between 2017 and 2018 caused by cryptocurrency mining . Bitcoin was at a high price, and mining was very profitable, especially altcoin mining. This led to a massive purchase of graphics cards, depleting stocks of AMD and NVIDIA solutions. As a result, NVIDIA investors sued the company for misreporting revenue.

The lawsuit was filed in 2017, but it was not until a week that it was formalized. This lawsuit indicates that NVIDIA inflated the gaming division's revenue by $ 1.000 billion. This amount of additional money had its origin in the mining of Altcoins, especially Ethereum, Zcash and the like.

NVIDIA sued for inflating gaming division revenue in 2017

NVIDIA counted all graphics card sales within the gaming division, rather than specifying that they came from the cryptocurrency market. It should be noted that NVIDIA did not sell them as graphics for mining, but as gaming graphics. The company does not have to know who buys the graphics card and what will be the use that will give it, they sold gaming graphics, without more.

"Sales data showed that, throughout 2017, between 60% and 70% of NVIDIA's revenue from GeForce in China came from sales to crypto miners, and not gamers," the lawsuit indicates. Remember that even planes were chartered to transport the coveted graphics cards to put them to mine.

That time, for now, has been left behind and the market has already normalized, as far as possible. Of course, in the future, if the price of Bitcoin and therefore of Altcoins (whose price is linked to Bitcoin) soars, the shortage of charts will return. A not-so-distant possibility is that a few days ago the Bitcoin Halving occurred, reducing the reward per block by half.

Investor demand

In early 2017, NVIDIA faced an unusual problem: its flagship product was flying off the shelves. Under normal circumstances, this trend would be applauded," the complaint reads.

But the huge growth in sales was not due to increased demand from gamers (NVIDIA's traditional consumer), but to gangs of online miners who bought the graphics by the thousands and deployed them in massive data centers to solve complex mathematical problems in search of digital currencies.

The launch of models intended for crypto mining and the presentation of their sales allowed the defendants to demand that all mining-related revenues be cordoned off with the manufacturers, creating the impression that the gaming business was the jewel in the crown of NVIDIA and which was insulated from crypto-related volatility (and falling demand that would follow the inevitable crash of crypto markets)

Investor lawsuit against NVIDIA

Source: TR