[lbarrow]

This is exactly right. You have to disclose risks to your business and if a really big part of your growth is coming from a new, volatile customer base, that's a big risk and you should disclose it. It has nothing to do with a specific requirement for GPUs or something; publicly traded companies _in general_ have a responsibility to understand where their revenue comes from and disclose that understanding to the public.

This is very run-of-the-mill stuff for the SEC. I think the only reason it's getting play on HN is that, if you aren't familiar with this sort of thing, it looks like the SEC is picking on Nvidia for doing business with crypto miners. But that isn't what the complaint is actually about.

[mpalczewski]

What's surprising to me about this, is that if you ever read the risk section of a 10-k it is basically a bunch of non sense, where they imagine every possible risk no matter how small a business might have. It's filled with so many low probability scenarios it's barely worth reading. If they put in a blurb about this in the risks section I'm not sure who would even notice.

At first glance, I suspect that they just copy pasted the risk section from the last 10-k and this was just some mistake rather than an intention to deceive. Anybody who knew anything about the business understood that crypto mining was a sizable part of that demand.

[dlgeek]

And enforcement actions like these are why the 10Ks are full of stuff like that.

[1980phipsi]

I wouldn't say it's "exactly right" because the investors knew that's where the growth was coming from. Just because it wasn't in the 10-K doesn't mean that investors didn't know it was a risk.

[paulpan]

The implication is how it holds for the most recent cryptomining cycle, since this settlement was for 2018 and we've definitely seen another surge in demand in 2021. Coupled with the chip shortage, this most recent cycle could well be bigger than this 2018 one.

Nvidia arguably hedged their bets better this time by 1) releasing their cryptomining-specific versions of GPUs, and 2) releasing drivers that tried to cripple the mining performance on the GeForce 3000-series lineup. But whether this was done in good faith is debatable and whether they disclosed properlyin the eyes of the SEC will be interesting to see.

[deevolution]

A risk to someone else is an opportunity for others. Risk is very subjective here

[yunohn]

What? The premise is very clear - NVIDIA stock has seen a meteoric rise off hugely increased sales, investors are concerned that nvidia is hiding the share of sales attributed specifically to a new volatile demographic (crypto in this case).

It’s like if Intel had 50% of their business from Apple and investors wanted to predict the impact of the M1 chip on their sales.