Japan’s DMM axes crypto mining unit amid plunging profits

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E-commerce powerhouse DMM.com has announced it is winding down its cryptocurrency mining operations, the latest firm to roll back after a disastrous year for the mining sector.

The Japanese e-commerce giant, one of the country’s largest online retailers, announced the decision on December 30, Nihon Keizai Shimbun reported. However, DMM reportedly made the decision in September when the firm identified declining profitability following crashing cryptocurrency prices.

The embarrassing move comes less than 12 months after the firm decided to get involved in cryptocurrency mining for the first time. Now, DMM is set to sell off its old mining equipment, according to the report.

To make matters worse, this process is expected to last into the second half of 2019, amidst a lack of demand fueled by poor crypto price performance.

First launched in 1999, DMM.com announced it was moving into crypto mining in September 2017, near the peak of the BTC bubble.

At the time, the firm had laid out plans for its mining division to be one of the world’s top 10 by the end of 2018, before moving into one of the coveted ‘top 3’ positions thereafter.

The firm currently also operates DMM Bitcoin, one of 16 cryptocurrency exchanges licensed by authorities in Japan, though for the time being, there is no indication the firm intends to wind up their exchange.

DMM’s mining operations began at a facility in the city of Kanazawa in February 2018, with Bitcoin Core (BTC), ETH and LTC as the cryptocurrencies of choice for the firm at the time. The firm had until recently planned to launch another service in the crypto space, but has since decided to focus on its existing business.

While few would have predicted DMM’s failure at launch, the news is becoming increasingly common in the crypto mining sector, with an ever growing number of firms going out of business through bankruptcy, or by deciding to jump ship before it sinks further.

Even mining equipment manufacturers are feeling the squeeze, with fellow Japanese firm GMO announcing it was suspending all work on its next generation Bitcoin mining equipment, in light of the ongoing demise of the cryptocurrency. The GMO news came off the back of a $324 million loss on its crypto mining equipment business, noted by the firm to be “extraordinary” in scale.