Monday, May 18th 2020

NVIDIA Investors Claw Back at Company, Claiming $1 Billion Mining GPU Revenue Hidden Away in the Gaming Division

NVIDIA investors have recently filed a suit against the company, claiming that NVIDIA wrongfully detailed its revenue indicators between departments. The main point of contention here is that investors claim NVIDIA knowingly obfuscated the total value of the crypto market boom (and subsequent bust) from investors, thus painting a picture of the company's outlook than was different from reality (making demand for the Gaming division look higher than it was in reality) and exposing them to a different state of affairs and revenue gains than they expected. The investors say that NVIDIA knew that a not insignificant number of its graphics cards sold between 2017 and 2018 was being bought-up solely for the purpose of crypto mining, and that the company knew this (and even marketed GPUs specifically for that purpose).

The crypto mining boom had miners gobbling up all NVIDIA and AMD graphics cards that they could, with both companies seemingly increasing production to meet the crypto mining bubble demand. However, due to the economics of crypto mining, it was clear that any profits derived from this bubble would ultimately open the door to an explosive logistics problem, as miners offloaded their graphics cards to the second-hand market, which could ultimately harm NVIDIA's financial book. Of course, one can look at NVIDIA's revenue categories at the time to see that crypto would hardly fit neatly into either the Gaming, Professional Visualization, Datacenter, Auto, or OEM & IP divisions.
Sources: The Register, via Tom's Hardware
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37 Comments on NVIDIA Investors Claw Back at Company, Claiming $1 Billion Mining GPU Revenue Hidden Away in the Gaming Division

#1
the54thvoid
It's odd. I'm no investor but it was pretty damn obvious what was driving the share price (and the cost of GPU's) through the roof. Yup, I'm also sure there was 'creative' accounting but frankly, the crypto bubble on GPU share prices was more obvious than JSH's love of leather jackets. Boo hoo, sob sob - no sympathy here.
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#2
hat
Enthusiast
Sounds like someone was trying to ride the crypto wave in another way, got burned, and wants to sue over it.
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#3
xkm1948
More like some law firms teamed up with some share holders trying to shake off a few bags of coins from Nvidia.
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#4
Kaotik
hat
Sounds like someone was trying to ride the crypto wave in another way, got burned, and wants to sue over it.
xkm1948
More like some law firms teamed up with some share holders trying to shake off a few bags of coins from Nvidia.
Did you bother even glancing at the actual documents? This isn't about investors getting burned trying to ride cryptowave, this is about NVIDIA straight up lying to their investors about the cryptomarkets and how they affect NVIDIAs results. Analysts estimated they put up to 1,3 billion dollars worth of cryptosales to "gaming market" which is seen by investors as a relatively steady market and there's plenty of proof of it in the document
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#5
Cranky5150
Ahhhhhh Ngreedia at it again.......
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#6
Fluffmeister
Does it really matter? If I recall some AIB's offered mining orientated cards, but the fact is the majority of their cards aimed at gamers were getting gobbled up by miners.

Glad the bubble burst.
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#7
Recus
Kaotik
Did you bother even glancing at the actual documents? This isn't about investors getting burned trying to ride cryptowave, this is about NVIDIA straight up lying to their investors about the cryptomarkets and how they affect NVIDIAs results. Analysts estimated they put up to 1,3 billion dollars worth of cryptosales to "gaming market" which is seen by investors as a relatively steady market and there's plenty of proof of it in the document
So where Geforce branded cards should be placed? Dumb shorters got burned. Real investors got they money back if you will check Nvidia shares price.
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#8
hat
Enthusiast
Kaotik
Did you bother even glancing at the actual documents? This isn't about investors getting burned trying to ride cryptowave, this is about NVIDIA straight up lying to their investors about the cryptomarkets and how they affect NVIDIAs results. Analysts estimated they put up to 1,3 billion dollars worth of cryptosales to "gaming market" which is seen by investors as a relatively steady market and there's plenty of proof of it in the document
Well...
Fluffmeister
Does it really matter? If I recall some AIB's offered mining orientated cards, but the fact is the majority of their cards aimed at gamers were getting gobbled up by miners.

Glad the bubble burst.
This. People bought GAMING (as much as I hate this word in marketing, it's useful here) graphics cards. Just because they didn't use them for gaming, but for crypto mining instead... is that Nvidia's fault?
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#9
Vayra86
Disgusting scumbags. That is all. Thank you
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#10
windwhirl
hat
Just because they didn't use them for gaming, but for crypto mining instead... is that Nvidia's fault?
Not really, no.

IMO, the investors should back up their claims with actual legal documentation that shows how many GPUs were sold for mining purposes, and not simply educated guesses or "market research".
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#11
hat
Enthusiast
How would you know what the buyer is using it for, though? You can make a fair guess when some not retailer buys cards by the pallet, but that's still just a guess. Many sales of a handful (definitely not a pallet/some crazy amount) of cards made it to the hands of small fry miners like me. I've still only got the same two GTX1070s going that I've had for a couple years now.
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#12
Carillon
and after this, we will get more spyware to check for what purpose we are using our PCs
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#13
Kaotik
hat
This. People bought GAMING (as much as I hate this word in marketing, it's useful here) graphics cards. Just because they didn't use them for gaming, but for crypto mining instead... is that Nvidia's fault?
No, but choosing to lie about it to your investors is. They had the data, as shown in documents, and they straight up lied about it.
hat
How would you know what the buyer is using it for, though? You can make a fair guess when some not retailer buys cards by the pallet, but that's still just a guess. Many sales of a handful (definitely not a pallet/some crazy amount) of cards made it to the hands of small fry miners like me. I've still only got the same two GTX1070s going that I've had for a couple years now.
That's why their software is full of telemetry snooping things ;) GeForce Experience for example (automatically installed to most, even if enthusiasts on the forums choose not to install it) collects crapton of data (again, as shown in the documents)
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#14
the54thvoid
Well, if I don't use a gaming product for gaming.....

I know it's not that simple. But there are many of us here who struggled with AMD and Nvidia GPU prices because of the mining surge. And to think investors were blind to this is simply as fraudulent as Nvidia's accounting. They invested, knew what was going on, and got burnt. Every-freaking-person knew where those sales were going. So did the investors.
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#15
Kaotik
the54thvoid
Well, if I don't use a gaming product for gaming.....

I know it's not that simple. But there are many of us here who struggled with AMD and Nvidia GPU prices because of the mining surge. And to think investors were blind to this is simply as fraudulent as Nvidia's accounting. They invested, knew what was going on, and got burnt. Every-freaking-person knew where those sales were going. So did the investors.
The thing is that companies aren't allowed to lie to investors. Investors can be as clueless as they want about these things, because the companies can't lie (or can but get sued when they do like now)
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#16
hat
Enthusiast
Kaotik
No, but choosing to lie about it to your investors is. They had the data, as shown in documents, and they straight up lied about it.
But, again, there's no real way to know what Joe Schmoe is using his GPU for. You can make a pretty good guess when someone buys a pallet of gaming cards, but that's still a guess. How does Nvidia differentiate between gaming and mining sales, then? Mining edition cards don't paint the whole picture either, because they're only a small fraction of total card sales, and not everyone bought them for mining.

Overall, my point is: everyone knew that a mining bubble was going on, and a lot of people tried to ride the wave and got burned. This is no different, and investors are trying to shift the blame on Nvidia.
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#17
Kaotik
hat
But, again, there's no real way to know what Joe Schmoe is using his GPU for. You can make a pretty good guess when someone buys a pallet of gaming cards, but that's still a guess. How does Nvidia differentiate between gaming and mining sales, then? Mining edition cards don't paint the whole picture either, because they're only a small fraction of total card sales, and not everyone bought them for mining.

Overall, my point is: everyone knew that a mining bubble was going on, and a lot of people tried to ride the wave and got burned. This is no different, and investors are trying to shift the blame on Nvidia.
Yes there is, because their drivers and accompanying software have telemetry snooping features which send your usage data to NVIDIA, and yes, they do study that and yes, they do discuss them internally, again as shown in the documents.
While the enthusiasts on forums might have enough knowledge not to install the worst offender of them (GeForce Experience), it gets installed by default and most people install whatever goes with default installation, they don't know any better. People on these and other forums who actually have a clue on these things are just a drop in the ocean of users who don't.
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#18
sutyi
hat
How does Nvidia differentiate between gaming and mining sales, then?
End-user / Consumer sales department and telemetry info.
Although all these cards get back into the gaming ecosystem anyway after serving their sentence in the crypto-mines, but skewed number generate skewed projections and I guess this is basis enough for some people that rode the crypto train a bit too long and this is the way they are trying to get some of that money back.

Also in other news: Water is wet, sky is blue, grass in green and big corpos lie, big money is still greedy.
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#19
hat
Enthusiast
How reliable is that telemetry data, I wonder? Miners aren't regular users, I'd imagine a lot of them have that disabled. Who needs GeForce Experience on a mining rig? I sure don't need it on my gaming rig. What does it offer me? Sets up my graphics settings? Most games do that anyway, and I still set them myself. Gives me a crappy streaming software? OBS does better anyway. I know I'm not the only one.

I would expect this case to be thrown out of court because of unreliable/incomplete data, if nothing else.
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#20
bug
I'm not sure I understand what this is about. Nvidia reported the (correct) number of video cards sold when demand went up and when it went down. The purpose of each sell was always a guess, at best, on Nvidia's part. How would that influence investors in any meaningful way?
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#21
Kaotik
hat
How reliable is that telemetry data, I wonder? Miners aren't regular users, I'd imagine a lot of them have that disabled. Who needs GeForce Experience on a mining rig? I sure don't need it on my gaming rig. What does it offer me? Sets up my graphics settings? Most games do that anyway, and I still set them myself. Gives me a crappy streaming software? OBS does better anyway. I know I'm not the only one.

I would expect this case to be thrown out of court because of unreliable/incomplete data, if nothing else.
It's not only that telemetry data, seriously people, at least take a quick glance through the documents.

(And again, I can't stress this enough, most people install whatever goes in by default, not what they need or even want. most people aren't like us on these forums who actually have a clue on these things. It's not like most of the miners are some robust companies with top notch IT departments )
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#22
mtcn77
hat
Sounds like someone was trying to ride the crypto wave in another way, got burned, and wants to sue over it.
The lawsuit is about the Nvidia stock crash in the same period.
bug
I'm not sure I understand what this is about. Nvidia reported the (correct) number of video cards sold when demand went up and when it went down. The purpose of each sell was always a guess, at best, on Nvidia's part. How would that influence investors in any meaningful way?
Well, if they know what sells, they can nominate the stock outlook.
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#23
bug
mtcn77
Well, if they know what sells, they can nominate the stock outlook.
If you need to know that, you look at the trend of video card sales for the past few years. Anything above, must be driven by mining. Or are they alleging Nvidia had the numbers, but didn't report them correctly?
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#24
Kaotik
bug
Or are they alleging Nvidia had the numbers, but didn't report them correctly?
Yes.
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#25
mtcn77
xkm1948
More like some law firms teamed up with some share holders trying to shake off a few bags of coins from Nvidia.
All it took was they answered to a question as 'yes', on the periodicity of recent sales. Crypto was a one-timer. That is the difference.
bug
If you need to know that, you look at the trend of video card sales for the past few years. Anything above, must be driven by mining. Or are they alleging Nvidia had the numbers, but didn't report them correctly?
There are reports. It is funny that they were suggesting the ceo would resign. That is a facetitious claim, obviously they don't know him all that well.
[Here is the whole timeline in my language, just scroll through the captions.]
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