Nvidia, a major supplier of GPUs used in cryptocurrency mining, issued a detailed seven-page memo to Wall Street analysts on Tuesday, explicitly denying allegations of accounting fraud akin to Enron raised by investor Michael Burry. Burry, famous for predicting the 2008 financial crisis, had viral claims questioning whether Nvidia's complex web of strategic investments and depreciation assumptions artificially inflate its business health, potentially leading to catastrophic unwinding if AI demand disappoints.
Nvidia's memo clarified that its accounting is transparent and legal, with strategic investments totaling $4.7 billion year-to-date against massive revenues, and denied any circular financing allegations. However, Burry's comparisons to Cisco's 1999-2000 collapse highlighted risks of overinvestment in AI infrastructure, similar to past telecom bubbles. Nvidia's investments in entities like CoreWeave—an AI cloud provider with over $6 billion in debt and a $1.2 billion operating loss in early 2025—and OpenAI were cited as examples of potential circular economic loops, though not fraudulent.
Burry also criticized GPU depreciation timelines, alleging hyperscalers extend useful lives from 2–3 years to 5–6 years, potentially understating depreciation by $176 billion through 2028 and overstating profits by 20% or more at companies like Oracle and Meta. Nvidia countered that GPUs maintain value for 4–6+ years, citing the A100 model's performance, but the memo did not resolve underlying economic risks. Raymond James analyst Simon Leopold supported Nvidia, stating the fraud narrative is inconsistent with fundamentals, and emphasized Nvidia's strong cash flow, including $22.1 billion in free cash flow for Q3.
For the crypto industry, Nvidia's role in GPU supply chains means any business instability could indirectly affect mining profitability and hardware availability, though the company noted crypto volatility does not impact its accounting. The allegations underscore broader concerns about AI-driven capex cycles and their potential ripple effects on tech-dependent sectors like cryptocurrency mining.
