Nvidia, a California-based technology company specialised in manufacturing high-end GPUs (Graphic Processing Units) is reportedly facing a class action lawsuit as the company experiences losses due to the diminishing demand of its products by crypto miners. The lawsuit was announced on 24 December 2018 by Schall Law, a U.S.-based shareholder rights litigation firm.
According to the announcement, Nvidia breached the Securities Exchange Act of 1934. A complaint was filed towards the company, stating that it made “false and misleading statements to the market”. The company boasted its capability to follow the crypto market and make necessary changes to its business if situations call for them. Additionally, the company stated that a reduce in demand for its GPUs by crypto miners would not affect the company’s business in a negative way as the gaming community still has great demand for its products.
The statements were conceived to be misleading, as Nvidia’s stock prices dropped significantly following the reduction in GPU purchases by miners. Investors proceed to sell-off Nvidia’s stocks after the poor performance by the company and the stock prices continued to drop by 54%.
Multiple aspects contributed to the elimination of GPUs from the crypto mining industry. One of it is the plummeting of cryptocurrency prices in the year 2018. As prices of major digital currencies drop by approximately 80-90%, it is deemed no longer profitable to mine using GPUs instead of mining hardware created specifically for the job. A U.S.-based global trading and technology firm recently made an analysis which observed that GPU Ethereum miners no longer gain profit in the month November, compared to the $150 profit per month back in July 2017.
Other companies were also affected by the exit of crypto miners from the market. AMD, a company considered to rival Nvidia, expected zero profits from GPU sales to crypto miners. Aside from that, GMO Internet, a Japanese firm, also announced that “extraordinary losses” during the year caused them to make the decision of leaving the mining industry.
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