Back in 2017 when cryptocurrency was all the hype, people were buying every graphics card they could get their hands on, which was quite the party for AMD and Nvidia. Now, it looks like Nvidia is getting sued by some upset investors who claim Nvidia mislead them by reporting crypto revenue as gaming revenue, according to a report at The Register.
The original lawsuit was started in 2017, but it is only this week that the actual complaint has been filed in California.
During the crypto-craze, coin miners would buy up every GPU they were able to obtain, which lead to massive shortages and severely increased the prices of graphics cards to levels at which gamers wouldn’t be buying them anymore.
“Sales data demonstrated that, throughout 2017, 60% to 70% of NVIDIA’s GeForce revenue in China came from sales to crypto-miners, not gamers.” reads the complaint. Such figures are similar elsewhere around the world, though likely varied a little depending on the popularity of mining and electricity prices. It’s also worth noting that the Chinese market accounted for the majority of Nvidia’s sales.
Analysts say that the under-reporting of GPUs for the crypto market lands somewhere around the $1.13-billion mark, and when the crypto mining market started showing signs of bust, Nvidia’s stock price also dropped significantly.
But, the GPUs were gaming GPUs, right?
Of course, you’re probably thinking something along the lines of, “But the GPUs were gaming hardware, what’s wrong with putting them in the books under the gaming division?”
We wouldn’t blame you for thinking this, but the investors disagreed. According to the complaint, Nvidia specifically marketed the GPUs for mining, and with the sales data available, it’s clear where the GPUs were going. The issue the investors had was that Nvidia wasn’t reporting this data, rather stating that its GeForce division was strong and that it would maintain stability once the crypto bubble cooled down.
Nvidia Handled the Crypto Situation Well
Both Nvidia and AMD’s earnings soared during the crypto bubble, which doesn’t come as a surprise. However, Nvidia and AMD responded differently to the bubble. Nvidia never confirmed whether it boosted production to meet demand, and even if it did a little, the aftermath shows that it couldn’t have been a huge boost.
AMD on the other hand, for a brief moment, had perhaps a bit too much faith in Crypto and boosted production. This worked out for a while, but when the bubble popped it was suddenly stuck with an inventory of Polaris GPUs which, to this day, it is unable to sell. Remember the Radeon RX 570 and 580 GPUs that were selling for well north of $600 apiece, if not more? Have a look on NewEgg, they’re still selling for as little as $120 (and have been for more than a year!) and even come with free goodies as incentives. Of course, they’re old cards at this point and no longer worth anything near their original MSRP, but typically GPUs this old wouldn’t be available on the market…