Nvidia investors filed a lawsuit against the company in 2017 alleging that Nvidia wrongly detailed its inter-department revenue indicators. Although this complaint was made in 2017, it was not until this week that the formal complaint was filed in the state of California.
This lawsuit records that Nvidia deliberately inflated the revenue of the company’s gaming division to a value of $ 1 billion . Where did these 1,000 million come from? easy, from the crypto mining bubble . And of course, the bubble was such that all miners bought gaming graphics to mine Bitcoins (and then Ethereum), which caused a massive shortage of graphics cards along with a rise in prices of all products, so finally a gaming product It was not being consumed by the players themselves, but by a hungry mining market that took everything they found, whether from AMD or Nvidia.
The problem is that all these sales were reported in the gaming division , instead of indicating that it was a direct benefit of cryptocurrencies, although of course, if we think they are graphics cards for gamers, there is also some logic that the sale of a gaming GPU, regardless of how it is used, reflects the revenue in the gaming division, but the company was not shy about offering at least one mention.
It is because of this that investors were deceived as Nvidia showed its business as very strong to the point of resisting the mining fever, when in fact everyone knew that those sales were related to crypto mining.
” The sales data showed that throughout 2017, between 60% and 70% of Nvidia’s GeForce revenue in China came from sales to crypto miners, and not to gamers, ” the complaint says. These figures are similar in other parts of the world, although they probably varied a bit depending on the popularity of mining and electricity prices, although it was the general trend even in Spain, with arrests for electricity theft coming to save mining costs
“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 said.
“But the huge growth in sales was not due to increased demand from gamers (the traditional consumer of Nvidia), but to gangs of online miners who bought the charts by the thousands and deployed them in massive data centers to solve complex mathematical problems in search of digital currencies. “
“The launch of crypto models and the presentation of their sales allowed the defendants to claim that all mining-related revenue be cordoned off to the manufacturers, creating the impression that the gaming business was the crown jewel of Nvidia and that it was isolated from crypto-related volatility (and falling demand that would follow the inevitable crash of crypto markets), “says the lawsuit.
Once the cryptocurrency bubble burst, the market was filled with second-hand charts that were used to mine, with the sellers themselves fighting to offer the best price to recover a large part of the investment made in record time, which meant that the stores they were unable to sell virtually any GPU for a very long time, causing Nvidia’s shares to end up devaluing by 50 percent . As of writing, Nvidia has yet to comment.