Japanese internet giant GMO Internet Group is quitting the Bitcoin mining hardware sector, Cointelegraph Japan reported Dec. 25 referencing a public document.
Citing “extraordinary loss” in Q4 this year, GMO, which began its foray into Bitcoin mining in 2017, said that it will “no longer develop, manufacture and sell” miners.
“After taking into consideration changes in the current business environment, the Company expects that it is difficult to recover the carrying amounts of the in-house-mining-related business assets, and therefore, it has been decided to record an extraordinary loss,” the document reads.
GMO will further relocate its mining operation “to a region that will allow us to secure cleaner and less expensive power supply.”
The news makes GMO the latest casualty of the 2018 Bitcoin (BTC) bear market, with falling prices taking their toll on mining profitability.
As Cointelegraph reported, scenes from China showed mass dumping of hardware, followed by news of redundancies from major player Bitmain.
After closing down its Israeli operations, this week, new reports suggested that Bitmain was preparing to fire up to half of its 2500-strong workforce.
GMO’s consolidated losses for Q4 totalled 35.5 billion yen ($320 million), while the unconsolidated loss tally will be around 38 billion yen ($334.5 million).
The company said that the losses had not impacted its “financial integrity.”
Conversely, in November, the company had reported “historical” performance of its cryptocurrency projects in Q3, which included mining hardware sales. Profits had totalled 2.6 billion yen ($22.8 million).
Japanese IT giant GMO Internet has said it will quit making and selling crypto miners following a year of bear market losses
The firm announced Tuesday that given the current “increasingly competitive” business environment and weak crypto market, it will “no longer develop, manufacture, and sell mining machines.”
On a consolidated basis, GMO is to record an “extraordinary loss” of 35.5 billion yen (or $321.6 million), consisting of impairment loss and losses from transfers of receivables, which are worth approximately $104.2 million and $217.4 million, respectively, due to the sales of relevant assets.
The firm said in its statement:
“After taking into consideration changes in the current business environment, the company expects that it is difficult to recover the carrying amounts of the in-house-mining-related business assets, and therefore, it has been decided to record an extraordinary loss.”
GMO first launched its miner making business in September 2017 and set up its in-house mining operations in northern Europe at the end of last year. The decision to quit its miner making business comes just months after GMO formally launched its B3 miner equipped with a 7nm mining chip.
The firm, however, said Tuesday that it will continue to run its in-house mining operations despite the current tough conditions, and is planning to review its revenue structure and relocate its mining center to a new region with “cleaner and less expensive” power resources.
“We are currently operating mining machines, and the depreciation cost will be almost zero after recognizing the impairment loss. Therefore, we will continue running mining operations if we can ensure that the revenue exceeds the electricity cost,” the firm explained in a conference call for institutional investors on Tuesday. However, it has not yet decided the full details of its new plans and whether that will help improve its profitability.
GMO’s crypto mining business reported a loss of 640 million yen (about $5.6 million) in Q3 2018, a further drop from its Q2 loss of 360 million yen (about $3.2 million). GMO said at the time that the poor performance was due to a worsening external environment and increasing depreciation costs.
Regarding GMO group’s other businesses, including its crypto exchange business, the firm said in the conference call that it believes they have “high growth potential and will continue to position them as growing sectors” for its future growth strategy.
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