Nvidia faces class action lawsuit for allegedly concealing crypto mining revenue gaps

On March 26, U.S. technology giant Nvidia and its CEO Renxun Huang were accused by investors of concealing the degree of dependence of the company's game graphics card revenue on crypto mining-related sales between 2017 and 2018. A federal judge approved the case for a class action. According to a ruling issued Wednesday by California Federal Court Judge Heywood S. Gilliam Jr., Nvidia failed to prove that its statements about crypto mining revenue had no impact on the company's share price. Investors first sued Nvidia in 2018, accusing the company of concealing more than $1 billion in graphics card sales related to crypto mining, and Huang Renxun deliberately downplayed the scale of such demand. In 2022, the U.S. Securities and Exchange Commission (SEC) fined Nvidia US$5.5 million for failing to disclose the impact of its crypto mining business on the company. Nvidia has always claimed that crypto mining accounts for only a small portion of its business and that most mining-related sales are accounted for separately from the core games business unit. The company also said that its supply chain is under control and can smoothly clear excess graphics card inventory. However, the plaintiff claimed that in fact, a considerable part of Nvidia's revenue driven by encryption demand was realized through GeForce game graphics cards, and most of the revenue was included in the game business segment, which exposed the company directly to risks brought by cyclical fluctuations in the cryptocurrency market.