Japanese internet giant GMO announced that it will no longer develop, manufacture, or even sell cryptocurrency mining equipment, as per their press statement released on December 25.
The internet conglomerate cited “extraordinary loss” amidst the time of plunge in prices of cryptocurrencies. However, the company will continue with its in-house mining business, once it is done reviewing its revenue structure and relocating its center to a place with “less expensive energy.”
The “extraordinary loss” was totaling 35.5 billion yen (roughly USD 350 million) in the fourth quarter (October 1, 2018, to December 31, 2018). Out of this, 11.5 billion yen (USD 104.1 million) was from its in-housing mining operation, whereas the remaining 24 billion yen (USD 217.4 million) was from the company’s mining equipment business.
The profitability of the company decreased significantly, which consequently led to the decline of its mining shares.
According to GMO’s announcement on their website:
“regarding the current mining machine markets, the environment is increasingly competitive because of the decreased demand mainly due to the decline in the cryptocurrency price, which in turn leads to the decline in the sales price.”
Later, the company also explained the reason for it quitting the mining equipment business by stating, “the Company expects that it is difficult to recover the cryptocurrency-mining-business-related assets through selling mining machines.”
A loss of 17.5 billion yen (USD 158.5 million) has been estimated in the transfer of receivables, GMO Internet will be transferring its receivables related to the manufacturing and creating of mining equipment to MP 18 LLC, a special purpose company (SPC), held by Tani Electronics Corporation. However, the company said it would not disclose the transfer value owing to confidentiality needs.
Despite the losses, GMO is hoping for an increase in net assets for the final quarter of, because of the offsetting profits on sales in its listed subsidiaries, GMO Payment Gateway, Inc. and GMO Financial Holdings, Inc.
The company also announced the development of its GMO Miner B2 and B3 mining machines that work on a 7-nanometer ASIC chip, comprising a hash power of 24 terahashes/second (TH/S) and 33 TH/S, costing $1,999.
The market has now begun an upward journey, and every crypto-enthusiast can only hope for things in the mining industry and mining hardware manufacturer to improve from here on. We might have to wait and watch until the market starts to bloom again, and once it does, will GMO consider entering the mining business again? What are your thoughts on this? Do let us know in the comments section.