I remember I was short the stock via puts quite a bit and they kept saying crypto was 5% of the business which I knew was a lie. It turned out great for me. Fast forward to 2022, you see how much of the GPU “shortage” was due to crypto mining especially in Russia (there are enough anecdotes of people in Siberia heating their kitchens with GPUs).
This was the best blog I ever noticed on this topic,an Australian using exhaust air from their miners to pre-heat incoming air to their heat pump. TL;DR - it's worth it.
When the war started in neighbouring Ukraine (I live in Romania) the local market started seeing graphics cards again which, previously, had been marked by local official resellers as "not in stock for the near future". This is for business procurement, so not even retail.
Do you think it's more than 5%? Maybe it is, but it seems like every place that offers GPU rental services (Amazon, Vast, etc) they are being used almost exclusively for machine learning applications. The rate they can be rented out is 3-4 times higher than would be profitable for any cryptocurrency mining, which should be a pretty solid indicator of where the demand is actually coming from.
I know I'm in the minority, but my GPUs are used almost exclusively for password cracking. I've got ASICs for the crypto mining.
If and only if you would have used electrical heating anyway, then using a GPU's waste heat for heating your home is one of the best things you can do with it and it's "100% efficient". That is, 100% of all the energy your GPU consumes also ends up as heat in your house and it's thermodynamically equivalent to any other type of resistive electric heater.
Of course, the energy consumed by any even semi-serious mining operation far exceeds a home's heating needs.
I have some doubts that any significant amount of cryptomining is actually done in Siberia. Part of that would include a few questions of the definition of “Siberia”, a deep examination (i. e. a suggestion to google) people’s ideas of the weather condition at that hypothetical place, and maybe a comparison of efficiency of heating a typical rural Russian home with coal vs. burning coal to generate electricity to run GPUs, after transmission over sowjet-era grids.
Considering how cryptocurrencies seem to attract the get-rich-quick crowd, it’s impressive to see the levels of motivated reasoning they are capable of, since neither motivation nor reasoning alone seem to be among their usual strengths.
This is kind of funny because the SEC is basically saying Nvidia held their share price artificially high by doing this, but Nvidia also bought back billions of their own shares, by this logic they were overpaying.
The most successful fraudsters eventually start to fully believe their own fraudulent story. This of course entails to do things that make sense in the fraudulent narrative, but are actually disadvantageous when judging them from a viewpoint outside of the fraud.
That is a separate issue. Stock buybacks can be done to reward insiders. A dividend would be distributed equally and has the effect of directly cutting the share price. A buyback distributes cash unequally and puts upward pressure on share prices. Only insiders know for sure if the action is being done to buy back shares on sale or to distribute profits.
Stock buy backs and dividends benefit or harm all shareholders in proportion to how much stock they own regardless of being an insider or not.
Unless the insiders act illegally. If an insider wants to act illegally they can do so in any number of ways other than knowing that a buy back is coming.
I am curious if there is evidence for this. I don’t see how distributing capital that could be used for growth pressures share prices up.
People not selling back the shares are trading the current profits for a bigger share of future profits, which may never exist. So I am not sure on a risk adjusted discounted cash flow model there is any justification for increased price pressure.
I always presumed that the main benefit of buybacks v dividends was being able to time capital gains for tax purposes.
But this is all speculation too, no evidence behind my post.
Buybacks increase prices, a large part of compensation is linked to share price, executives don’t care if the company is overpaying, they see more in their pocket.
You think wrong, if they commit, it's to push their agenda even further, they knew what they were doing, maybe they did in preparation for such charges
"The SEC’s order also finds that NVIDIA’s omissions of material information about the growth of its gaming business were misleading given that NVIDIA did make statements about how other parts of the company’s business were driven by demand for crypto, creating the impression that the company’s gaming business was not significantly affected by cryptomining.
The SEC’s order finds that NVIDIA violated Section 17(a)(2) and (3) of the Securities Act of 1933 and the disclosure provisions of the Securities Exchange Act of 1934. The order also finds that NVIDIA failed to maintain adequate disclosure controls and procedures. Without admitting or denying the SEC’s findings, NVIDIA agreed to a cease-and-desist order and to pay a $5.5 million penalty."
I'm confused about why this matters. From anecdotal experience, Nvidia seems to be struggling to meet demand for its products right now anyways. It's hard to tell, but I assume that even if crypto took a major hit, Nvidia could still sell a good chunk of its newfound supply to genuine gamers instead. Alternatively, they could invest more into their ML-focused chips instead, which are also supply constrained.
Granted, this might not have been true in 2018, which appears to be what the SEC's charge is focused on. Nonetheless, I don't think the huge amount of demand from crypto for Nvidia's products should be construed as a bad thing; there's plenty of other demand.
Companies are not allowed to lie to their investors. Part of the deal of being a public company is that all communication is communication with their investors. If they told their investors that they were selling GPUs to gamers, while in fact selling most of them to miners, they violated the law. The principle of it being that said investors might have had a different outlook on the company depending on who they were selling to.
Besides, there is a difference. Because whenever crypto collapses (and it has twice already in the past), a lot of the existing mining GPUs end up on the secondary market. If this happens now, it will have a material impact on the prices of GPUs going forwards.
> they told their investors that they were selling GPUs to gamers, while in fact selling most of them to miners
I don't think nvidia even did this, they marketed to gamers and reported the correct number of sales. What people do with the card once its sold is not up to nvidia its not information that an investor can reasonable assume nvidia will report on.
If I invest in a steel mine they market their steel to car manufactures and report the correct number of sales. If they also happen to sell to gun manufactures I can't then sue said company for not reporting that.
On the other hand, NVIDIA does not have legal authority to control where its GPUs actually end up being used (nasty things like drivers shutting down when detecting virtualizations aside). How can anyone prove or disprove that a specific percentage of GPUs end up in a specific market, as long as NVIDIA can prove they have kept their usual delivery targets towards wholesale distributors?
GPU mining was consuming much more of the supply than you suggest (that’s literally the basis of this lawsuit)
When the GPU mining bubble pops, there’s a secondary effect as miners unload their used GPUs at fire sale prices on the secondary market. This means that the demand reduction is even worse than it might seem.
What about a year or so later when supply chains are back to normal and crypto demand dries up? Suddenly investors are wondering why their revenues are falling 50% instead of 5% that they predicted.
A better question to ask is "why did Nvidia feel it was necessary to lie to their investors?". Lying to your investors is illegal, regardless of whether or not you profited from it.
> A few million is not a punishment it is encouraging Nvidia to do nasty things in the future since they know they can get away with it.
Ok so tell me precisely how much NVDA benefited by not disclosing how much sales were to crypto?
I'm a NVDA stock holder and I just don't see what the fuss is. It's been impossible to buy a Nvidia card over the last 3 years due to scalpers and crypto farmers. I guess I thought everyone kinda knew that?
If I were the SEC, I'd say that they lied about it to avoid a risk discount on their stock. The volatility of crypto currencies exposes their business to more risk. Whether that's true, or provable, IDK. However, it is motive for Nvidia to lie, and they did lie.
The problem seems from stem from the fact that if NVDA disclosed that crypto amounted to 5% of their market when instead it's 5 times as much (random numbers for the sake of the example), investors are bound to suffer more in case of a crypto market crash, because the crypto exposure is much higher than what was disclosed by the company.
I think the gist is that they’ve intentionally misled investors by misclassification of sales from more violative, unpredictable crypto into stable pc gaming market.
Readit News
Hey, all you blockchain skeptics, here’s what you are always asking about: a practical use for blockchain tech.
https://blog.haschek.at/2021/how-i-heat-my-home-by-mining.ht...
When the war started in neighbouring Ukraine (I live in Romania) the local market started seeing graphics cards again which, previously, had been marked by local official resellers as "not in stock for the near future". This is for business procurement, so not even retail.
I know I'm in the minority, but my GPUs are used almost exclusively for password cracking. I've got ASICs for the crypto mining.
Of course, the energy consumed by any even semi-serious mining operation far exceeds a home's heating needs.
Considering how cryptocurrencies seem to attract the get-rich-quick crowd, it’s impressive to see the levels of motivated reasoning they are capable of, since neither motivation nor reasoning alone seem to be among their usual strengths.
Such a beautiful idea, if only the computation was actually useful.
It is just a more tax efficient way to distribute earnings.
Unless the insiders act illegally. If an insider wants to act illegally they can do so in any number of ways other than knowing that a buy back is coming.
I am curious if there is evidence for this. I don’t see how distributing capital that could be used for growth pressures share prices up.
People not selling back the shares are trading the current profits for a bigger share of future profits, which may never exist. So I am not sure on a risk adjusted discounted cash flow model there is any justification for increased price pressure.
I always presumed that the main benefit of buybacks v dividends was being able to time capital gains for tax purposes.
But this is all speculation too, no evidence behind my post.
The SEC’s order finds that NVIDIA violated Section 17(a)(2) and (3) of the Securities Act of 1933 and the disclosure provisions of the Securities Exchange Act of 1934. The order also finds that NVIDIA failed to maintain adequate disclosure controls and procedures. Without admitting or denying the SEC’s findings, NVIDIA agreed to a cease-and-desist order and to pay a $5.5 million penalty."
Cost of doing business.
Remember about the SEC whistleblower program, if you had inside proof of intent the fine would be a lot higher, and you'd get a share of the fine!
Granted, this might not have been true in 2018, which appears to be what the SEC's charge is focused on. Nonetheless, I don't think the huge amount of demand from crypto for Nvidia's products should be construed as a bad thing; there's plenty of other demand.
Besides, there is a difference. Because whenever crypto collapses (and it has twice already in the past), a lot of the existing mining GPUs end up on the secondary market. If this happens now, it will have a material impact on the prices of GPUs going forwards.
I don't think nvidia even did this, they marketed to gamers and reported the correct number of sales. What people do with the card once its sold is not up to nvidia its not information that an investor can reasonable assume nvidia will report on.
If I invest in a steel mine they market their steel to car manufactures and report the correct number of sales. If they also happen to sell to gun manufactures I can't then sue said company for not reporting that.
When the GPU mining bubble pops, there’s a secondary effect as miners unload their used GPUs at fire sale prices on the secondary market. This means that the demand reduction is even worse than it might seem.
A few million is not a punishment it is encouraging Nvidia to do nasty things in the future since they know they can get away with it.
> A few million is not a punishment it is encouraging Nvidia to do nasty things in the future since they know they can get away with it.
Ok so tell me precisely how much NVDA benefited by not disclosing how much sales were to crypto?
I'm a NVDA stock holder and I just don't see what the fuss is. It's been impossible to buy a Nvidia card over the last 3 years due to scalpers and crypto farmers. I guess I thought everyone kinda knew that?
https://www.engadget.com/nvidia-sec-settlement-crypto-mining...
Its old news by a week or week and a half