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Nvidia settles cryptomining charges for $5.5 million

Nvidia’s gaming chips had been used to mine cryptocurrency, including Ethereum, since at least 2018

Nvidia offices in Santa Clara California

Nvidia has agreed to pay $5.5 million (£4.46 million) to settle the long-standing civil charges accusing the chip giant of attempting to conceal the impact of cryptomining on its gaming business.

Nvidia’s gaming chips had been used to mine cryptocurrency, including Ethereum, since at least 2018.

However, the Santa Clara, Califonia-based company “failed to disclose that cryptomining was a significant element of its material revenue growth from the sale of its graphics processing units (GPUs) designed and marketed for gaming” in its back-to-back quarterly financial results in fiscal 2018.

This violated Section 17(a)(2) and (3) of the Securities Act of 1933 and the disclosure provisions of the Securities Exchange Act of 1934, according to the US Securities and Exchange Commission (SEC).

Commenting on the charges, SEC Enforcement Division’s Crypto Assets and Cyber Unit chief Kristina Littman said that “NVIDIA’s disclosure failures deprived investors of critical information to evaluate the company’s business in a key market”.

It also led to an influx of demand that increased the price of Nvidia’s gaming processors and contributed to the global chip shortage.

“All issuers, including those that pursue opportunities involving emerging technology, must ensure that their disclosures are timely, complete, and accurate,” Littman added.

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On Friday, the SEC announced that the charges against Nvidia had been settled for $5.5 million, without admitting or denying the charges. The chip giant didn’t issue any statement on the settlement and didn’t reply to IT Pro’s request for comment.

Nvidia has also taken steps to tackle the issue of its chips being used for cryptomining. In 2021, the company introduced Lite Hash Rate (LHR) technology that prevents mining capabilities on a number of its GPUs, including the GeForce RTX 3060, RTX 3060 Ti, RTX 3070, and RTX 3080.

Nvidia’s global head of GeForce Marketing Matt Wuebbling said at the time that the “software drivers are designed to detect specific attributes of the Ethereum cryptocurrency mining algorithm, and limit the hash rate, or cryptocurrency mining efficiency, by around 50%”.

However, recent reports from Forbes suggest that the LHR lock had been successfully broken by mining software provider NiceHash.

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