The "mine boss" and the gamers, Nvidia all want it.
Author | Yao Yongzhe
Edit | Bao Yonggang
According to Reuters on May 6, Nvidia has agreed to pay a $5.5 million civil fine to settle the U.S. Securities and Exchange Commission's civil charges against its failure to properly disclose the impact of cryptocurrency mining on its gaming business.
The SEC said in a statement that in consecutive quarters of fiscal 2018, Nvidia failed to disclose that cryptocurrency mining was a "significant factor" in the growth of its GPU sales.
The SEC said that in 2018, Nvidia's GPUs became popular because of virtual currency mining. Regulators believe Nvidia knew the information, but Nvidia did not share it with investors. This misleads the analysts and investors involved.
Nvidia did not acknowledge or deny the SEC's findings and agreed to pay a $5.5 million civil fine. An NVIDIA spokesman declined to comment on the matter.
In fact, Nvidia's GPU business and cryptocurrency mining have always been inextricably linked.
Cryptocurrency "flying" graphics card
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In May 2018, Nvidia disclosed its cryptocurrency-related sales figures for the first time. According to Nvidia, it generated $289 million in sales from cryptocurrency chips, or 9 percent of its total revenue, well beyond the $200 million analysts had previously expected.
Earlier in 2018, the retail price of Nvidia GPUs rose sharply. "GPUs are now on the run compared to the tight supply earlier in the quarter." Nvidia chief financial manager Kress told investors on a 2018 conference call.
But the reality is that the soaring price of GPUs and the shortage of supply have not only not been alleviated since then, but have intensified.
As the price of virtual currency continues to rise, the benefits that virtual currency mining can bring are also becoming more and more abundant. This has led to more and more people joining the "mining army". The demand for graphics cards by "miners" has squeezed the number of graphics cards on the market on the one hand, and on the other hand, it has prompted some dealers to hoard, which eventually makes the price of graphics cards rise.
The COVID-19 pandemic at the end of 2019 has been the catalyst for all of this.
After the arrival of the epidemic, graphics card production capacity declined. At the same time, due to the need for remote work and other needs, people's demand for GPUs has become more intense. At this time, it is just in time to catch up with several waves of virtual currency price increases, making the price of graphics cards high.
There is even a strange phenomenon that second-hand graphics cards are sold at a higher price than the brand new price they bought a few years ago. Some people joke that "graphics cards already have financial attributes."
An NVIDIA RTX 3070Ti graphics card, which originally cost 4500 yuan, even rose to 7000 yuan at the highest, which made ordinary consumers prohibitive. In order to keep its own basic game players, Nvidia has also made a lot of efforts.
Nvidia's "Iron Fist" is difficult to defeat the miners
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As early as 2018, Nvidia issued an announcement to dealers because of the problem of "one card is difficult to find" in the market, asking dealers to give priority to gamers rather than "miners". Nvidia hopes that through this move, the graphics cards on the market will flow more to gamers than to "miners".
In the same year, Nvidia also launched the 3G video memory version of the GTX1060 graphics card that is the most concerned by players in this wave of "card shortage tide". Nvidia hopes to reduce miners' interest in graphics cards by reducing the amount of memory allocated to reduce the revenue earned by miners in mining.
In February 2021, NVIDIA launched a CMP product dedicated to mining. CMP products are different from ordinary graphics cards, it has no display input, can not be graphical processing, and can only be dedicated to "mining". Speaking about CMP products, Wuebbling, a spokeswoman for Nvidia, said, "With CMP, we can help miners build the most efficient data centers while retaining GeForce RTX GPUs for gamers. ”
In May 2021, in the face of player anger, Nvidia sacrificed a "killing move". NVIDIA has partially limited the performance of the graphics card through the performance lock, which does not affect the gaming experience at the same time, and minimizes the role of the graphics card for virtual currency-related calculations.
After the "killing move" was dispatched, it finally worked. After the limitation of graphics card mining performance, the price of graphics cards has gradually stabilized, and Ethereum, the main force of virtual currency, announced that it will no longer be able to use GPU "mining" after its technology update.
But Nvidia's "iron fist" also attracted retaliation. On February 28, 2022, Nvidia suffered a hack that led to the downing of the email system and development platform. The hacking group LAPSU$ then announced responsibility for the matter after Nvidia's announcement.
The hacking group claimed to have acquired 1TB of NVIDIA's classified information and used it to blackmail Nvidia into lifting mining restrictions on graphics cards. Although NVIDIA ultimately did not agree to the hackers' request, some confidential information, including the source code of the core technology DLSS 2.2, was also leaked by hackers.
In the process of Nvidia and the "miner" falling in love and killing each other, the player's resentment has become more and more high. Although the debate over which side of NVIDIA's "ass sits on" has never stopped, the SEC's fine at least shows that Nvidia's contribution to the miners' real money and silver is "well known".
NVIDIA "pretends to be confused"
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In the NVIDIA report, which asked the SEC to issue a fine, NVIDIA highlighted the substantial growth in the "game" space, but concealed in the report how much of the revenue in the "game growth" actually came from the cryptocurrency mining market.
In the report, Nvidia said that gaming revenue in the second fiscal quarter of 2018 increased by 52% year-on-year, and the third fiscal quarter increased by 25% year-on-year. But the SEC noted that part of the so-called "game revenue" actually depends on the volatile cryptocurrency market, but Nvidia did not disclose a specific percentage.
Investments in the cryptocurrency space are often accompanied by great risk. In 2018, there was a "mining disaster" in cryptocurrencies, and the value of virtual currencies such as Bitcoin collapsed for a while, which once led Nvidia to cut its quarterly revenue forecast by $500 million, and eventually triggered a lawsuit by shareholders.
Investors' distrust of cryptocurrencies is also reflected in NVIDIA's shares, and after NVIDIA first announced the impact of cryptocurrencies as a percentage of revenue in 2018, NVIDIA's stock price fell in response, falling 3.3% after the earnings report.
According to the SEC, Nvidia is not only aware of the impact of cryptocurrencies on its "gaming" business, but is deliberately concealing it. The SEC therefore found NVIDIA to constitute fraud.
In the past few years, Nvidia has stood in the position of players and "iron fisted" to miners everywhere, and on the other hand, it has enjoyed the benefits brought by cryptocurrencies. It can be said that it is two-sided flattery, left and right.
Today, hackers representing the miner community have attacked, and the SEC, which represents the interests of investors, has also issued fines.
As the cryptocurrency market has languished, the price of GPUs has also plummeted this year. Moreover, due to the fame of the 30 series graphics card "mining card", consumers have become extremely cautious in making decisions.
Nvidia's days of oscillating left and right between players and miners may really not be far from over.