NVIDIA fined USD $5.5 million for hiding how many gaming GPUs were sold to crypto miners

Lakados

Supreme [H]ardness
Joined
Feb 3, 2014
Messages
5,710
most likely, expect to see a price hike for next gen
Well TSMC raised their rates 10% or so to cover their expansion costs. So yeah, combined with increased demand on their 5nm and we are looking at quite the increase indeed.
 

Red Falcon

[H]F Junkie
Joined
May 7, 2007
Messages
11,534
I'll just use my f****** verbal morality fines, thank you.
Basically what NVIDIA did with this "fine".

tumblr_oredhxbrvY1qmt01xo3_500.gif


One thing I just noticed is the logo on the morality-fine machine.
Are they powered by Debian Linux...? o_O

1652146630341.png


Demolition Man released in October 1993.
Debian Linux released in September 1993.

It's like the creators of Demolition Man just knew embedded devices were going to be running Linux in the future; that is some seriously scary forward-thinking.
Out of all the cyberpunk movies in the last 40 years, Demolition Man really did have the most accurate prediction of the dark cyberpunk future, which we sadly are now living in. :whistle:

If you want to make your own morality-fine machine that really is powered by Debian, here you go!
 

Krenum

Fully [H]
Joined
Apr 29, 2005
Messages
18,777
Basically what NVIDIA did with this "fine".

View attachment 472125

One thing I just noticed is the logo on the morality-fine machine.
Are they powered by Debian Linux...? o_O

View attachment 472124

Demolition Man released in October 1993.
Debian Linux released in September 1993.

It's like the creators of Demolition Man just knew embedded devices were going to be running Linux in the future; that is some seriously scary forward-thinking.
Out of all the cyberpunk movies in the last 40 years, Demolition Man really did have the most accurate prediction of the dark cyberpunk future, which we sadly are now living in. :whistle:

If you want to make your own morality-fine machine that really is powered by Debian, here you go!
Everything from Demolition Man is coming true!

Though, I'm not quite sure about the Taco Bell thing, I haven't seen a Taco Bell commercial in years...
 

reaper12

2[H]4U
Joined
Oct 21, 2006
Messages
2,659
Alright, then, make the fine so big it closes the business. No more customer, no more complaining.

Well, that would mean both Nvidia and AMD would be closed. AMD told worse lies to their stockholders about Llanos and got fined $30 million. So if you think fines should be so big that companies have to close. Then AMD would be gone already.
 

DejaWiz

Fully [H]
Joined
Apr 15, 2005
Messages
21,547
This is frivolous and ridiculous on the SEC's part.
It's like blaming the auto makers for not saying how many of their cars were sold to people that used them to commit crimes: speeding, reckless driving, DUI, getaway vehicle, etc.
That info doesn't exist in their databases!
Does the SEC expect businesses to be all Minority Report?
 

Jagger100

Supreme [H]ardness
Joined
Oct 31, 2004
Messages
7,698
Don't understand why those sales would be anyone's business except if they were deceiving shareholders. And if the shareholders aren't mad, then it should be dropped.
 

Lakados

Supreme [H]ardness
Joined
Feb 3, 2014
Messages
5,710
Don't understand why those sales would be anyone's business except if they were deceiving shareholders. And if the shareholders aren't mad, then it should be dropped.
Shareholders were mad because they saw a huge spike in sales and saw it thinking that growth would continue not as a one time event. Nvidia didn’t correct them on that line of thinking, so the SEC came in to determine if that omission was intentional or not. They determined they couldn’t tell because the data didn’t exist but also know that Nvidia had to know it was going on. So they got a tiny fine for not being diligent enough to keep the SEC out of it.
 

Andrew_Carr

2[H]4U
Joined
Feb 26, 2005
Messages
2,570
Do miners actually buy the mining cards? They have like zero resale value.
Everyone thought they were garbage at first because of the high cost per hashrate and lack of resale value etc, but the CMP 170HX is about twice as efficient as the 3000 series GPUs so they've been selling well. You'll still see them on ebay for a $2k markup, but suppliers have been telling me for the last month or two that they're unavailable (they did just get a shipment in this week though).

Shareholders were mad because they saw a huge spike in sales and saw it thinking that growth would continue not as a one time event. Nvidia didn’t correct them on that line of thinking, so the SEC came in to determine if that omission was intentional or not. They determined they couldn’t tell because the data didn’t exist but also know that Nvidia had to know it was going on. So they got a tiny fine for not being diligent enough to keep the SEC out of it.
I kinda get where the SEC is coming from with this, but at the same time, everyone saw what happened last time with GPU sales slumping after crypto crashed, so how could any investor not predict that happening again at some point, or that nvidia was seeing increased sales due to crypto mining demand?
 

Lakados

Supreme [H]ardness
Joined
Feb 3, 2014
Messages
5,710
Everyone thought they were garbage at first because of the high cost per hashrate and lack of resale value etc, but the CMP 170HX is about twice as efficient as the 3000 series GPUs so they've been selling well. You'll still see them on ebay for a $2k markup, but suppliers have been telling me for the last month or two that they're unavailable (they did just get a shipment in this week though).


I kinda get where the SEC is coming from with this, but at the same time, everyone saw what happened last time with GPU sales slumping after crypto crashed, so how could any investor not predict that happening again at some point, or that nvidia was seeing increased sales due to crypto mining demand?
This was the result of the SEC investigation from the 2017 crash.
 

DejaWiz

Fully [H]
Joined
Apr 15, 2005
Messages
21,547
vehicles used to commit crimes are almost always stolen vehicles in the first place, so this is another useless metric LoL!

I'm pretty sure *most* people are using their own vehicles instead of stealing them when speeding, driving recklessly, or DUI, which vastly outnumbers the amount of vehicles stolen to be used in other crimes.
 

ElementDave

Limp Gawd
Joined
May 5, 2013
Messages
315
One thing I just noticed is the logo on the morality-fine machine.
Are they powered by Debian Linux...? o_O
The dark dystopian cyberpunk future may be inevitable, but my OS (one of them at least) is still supported in 2032. Victory! :LOL:
Demolition Man released in October 1993.
Debian Linux released in September 1993.

It's like the creators of Demolition Man just knew embedded devices were going to be running Linux in the future; that is some seriously scary forward-thinking.
It's probably running a customized Busybox too. How ironic would that be if the morality machine had to fine itself for GPL infringement.
Out of all the cyberpunk movies in the last 40 years, Demolition Man really did have the most accurate prediction of the dark cyberpunk future, which we sadly are now living in.
There were reports of an upcoming sequel a couple of years ago (as I'm sure you're aware), but it's hard to know what to make of news from the entertainment industry. I think they wanted to do a sci-fi version of the original, which has since been reclassified as a "docudrama". It isn't surprising that few people are aware of Demolition Man 2 (2013), as it contained "inappropriate content" and promoted ideas that were deemed counterproductive to the interests of certain entities, and was therefore not authorized for release to the public. :borg:
If you want to make your own morality-fine machine that really is powered by Debian, here you go!
Interesting! There may still be time to sneak in a backdoor. I'll take a look as soon as the smoke from the nearby book-burning festival dies down. 🔥
 

Zarathustra[H]

Extremely [H]
Joined
Oct 29, 2000
Messages
34,051
This was a legitimate fine, it's just like with all fines from the SEC, it was a few orders of magnitude too small to change corporate behavior.

This is not a conversation about the appropriateness of GPU's being used for mining, or gamer rage, or anything like that. It was a violation of Nvidia's responsibility to be honest with their investors. A public company has very many rules they need to obey when it comes to financials and statements.

In this case, gaming is considered a fairly stable market. Gamers regularly buy GPU's, and there aren't violent swings in that market. Heck, even during the financial crisis, GPU's continued to sell.

Mining on the other hand is very volatile. Sales to miners can be huge one year, and then drop off a cliff the next.

By lying to their investors about where their sales were going, they were lying about how stable these sales were, resulting in investors overestimating the sales stability. Again, public company needs to follow public disclosure rules, and they didn't.

Again, a $5.5 million fine is pocket change for a company like Nvidia though, so this is unlikely to result in any kind of changes in behavior. It just winds up being the cost of doing business.

SEC really needs to step up its fines to the point where they have real financial harm to a company, otherwise they don't be much of a deterrence at all.
 

sharknice

2[H]4U
Joined
Nov 12, 2012
Messages
2,895
This was a legitimate fine, it's just like with all fines from the SEC, it was a few orders of magnitude too small to change corporate behavior.

This is not a conversation about the appropriateness of GPU's being used for mining, or gamer rage, or anything like that. It was a violation of Nvidia's responsibility to be honest with their investors. A public company has very many rules they need to obey when it comes to financials and statements.

In this case, gaming is considered a fairly stable market. Gamers regularly buy GPU's, and there aren't violent swings in that market. Heck, even during the financial crisis, GPU's continued to sell.

Mining on the other hand is very volatile. Sales to miners can be huge one year, and then drop off a cliff the next.

By lying to their investors about where their sales were going, they were lying about how stable these sales were, resulting in investors overestimating the sales stability. Again, public company needs to follow public disclosure rules, and they didn't.

Again, a $5.5 million fine is pocket change for a company like Nvidia though, so this is unlikely to result in any kind of changes in behavior. It just winds up being the cost of doing business.

SEC really needs to step up its fines to the point where they have real financial harm to a company, otherwise they don't be much of a deterrence at all.

Ok, but can you tell me how this helps the investors that were supposedly wronged?

I could understand if the fine or some sort of punishment was for the person/people doing the wrongdoing. But the fine was to NVIDIA as a compnay. So basically it was a fine for the investors.
And the money for the fine is going straight to the government. The investors aren't getting anything out of it.
 

Zarathustra[H]

Extremely [H]
Joined
Oct 29, 2000
Messages
34,051
Ok, but can you tell me how this helps the investors that were supposedly wronged?

I could understand if the fine or some sort of punishment was for the person/people doing the wrongdoing. But the fine was to NVIDIA as a compnay. So basically it was a fine for the investors.
And the money for the fine is going straight to the government. The investors aren't getting anything out of it.

Yep, that is a bit of a perverse impact. Same thing when groups of shareholders sue a company for wrongdoing. Even if they win, heir impact is just to harm the rest of the shareholders.

The intent is that the fine is supposed to dissuade future wrongdoing. It may not help the shareholders that were harmed in this case, but enforcing the regulations still has value, as it acts as a disincentive for others to do the same thing in the future.

It's similar to the reasoning behind punitive damages in lawsuits. It provides a disincentive for others to do the same thing, and overall helps keep order and justice. It would be better if those punitive damagees were directed elsewhere than to the plaintiff though. Maybe victims compensation funds or something like that, because it is often kind of crazy that a single person gets a payout 1000 times greater than their actual damages.

Except, the fines are way too small to accomplish that, which is why they need to go up by at least a couple of orders of magnitude. There needs to be some sort of scaling factor based on the means of the organization. Maybe set fines by percent of market cap, or something like that. This way you can punish large firms and small firms equally
 

Lakados

Supreme [H]ardness
Joined
Feb 3, 2014
Messages
5,710
Yep, that is a bit of a perverse impact. Same thing when groups of shareholders sue a company for wrongdoing. Even if they win, heir impact is just to harm the rest of the shareholders.

The intent is that the fine is supposed to dissuade future wrongdoing. It may not help the shareholders that were harmed in this case, but enforcing the regulations still has value, as it acts as a disincentive for others to do the same thing in the future.

It's similar to the reasoning behind punitive damages in lawsuits. It provides a disincentive for others to do the same thing, and overall helps keep order and justice. It would be better if those punitive damagees were directed elsewhere than to the plaintiff though. Maybe victims compensation funds or something like that, because it is often kind of crazy that a single person gets a payout 1000 times greater than their actual damages.

Except, the fines are way too small to accomplish that, which is why they need to go up by at least a couple of orders of magnitude. There needs to be some sort of scaling factor based on the means of the organization. Maybe set fines by percent of market cap, or something like that. This way you can punish large firms and small firms equally
But that’s the fun part, the SEC found that Nvidia hadn’t done anything wrong. They should have done a better job at information gathering and reporting but they reported the data they had honestly. The fine was for not gathering enough data to present to their shareholders not for misappropriating the data they did have.

Here’s one of the lines from the finalized report.
"Nvidia's senior management internally expressed a desire to capture the cryptomining demand, and at the same time shelter its gaming business from cryptominers and protect supply of GPUs for gamers," said the SEC report.

The fine kicks in here:
"While the company could not track when and which specific gaming GPUs were purchased for the purpose of cryptomining, company personnel estimated using various assumptions that the impact of cryptomining was at levels that would indicate cryptomining was a significant factor in the year-over-year growth in gaming revenue during the relevant period," the SEC report said.
 
Last edited:
Top