Japan’s GMO gives up crypto mining machine business

Getting your Trinity Audio player ready...

GMO Internet, Inc. has decided to stop its business of developing, manufacturing, and selling mining equipment, citing “extraordinary loss” during a time of falling cryptocurrency prices.

The Japan-based internet giant had announced the launch of its mining equipment business just 15 months ago. In its latest press statement, GMO said that it shall continue with its in-house mining business, after a review of its revenue structure, as well as maintain mining operations with the GMO Internet office as headquarters.

Included in the review will be a decision on relocating its mining operations “to a region that will allow us to secure cleaner and less expensive power supply,” according to the company.

A consolidated loss totaling ¥35.5 billion ($321.5 million) was foreseen for the fourth quarter. Of this, ¥11.5 billion ($104.1 million) was seen to come from its in-home mining operations, while ¥24 billion ($217.4 million) from its mining equipment business.

Profitability fell along with cryptocurrency prices, with GMO failing to increase its mining share as it had expected, “due to the rise of the global hash rate.”

With regards to mining equipment, “the environment is increasingly competitive because of the decreased demand mainly due to the decline in the cryptocurrency price, the decline in the sales price, etc.,” GMO said.

In further explaining its decision to get out of the mining machine business, the company said, “the Company expects that it is difficult to recover the cryptocurrency-mining-business-related assets through selling mining machines.”

A ¥17.5-billion ($158.5-million) loss has been estimated in the transfer of receivables, wherein GMO Internet will transfer its assets related to the manufacturing and development of mining machines to special purpose company MP18 LLC, of Tani Electronics Corporation.

In spite of the losses, GMO expects an increase in net assets for the fourth quarter of 2018, due to offsetting gains on sales of shares in its listed subsidiaries, GMO Payment Gateway, Inc. and GMO Financial Holdings, Inc.

In the middle of this year, the company released its GMO miner B2 and B3 machines that use a 7-nanometer ASIC chip, boasting a hash power of 24 terahashes/second (TH/S) and 33 TH/S respectively, and costing $1,999.

During the CoinGeek Week conference last month, MicroBt Technology Vice President Jordan Chen, in a presentation, spoke of more 7nm ASICs being used for miners in 2019, with actual performance expected to be 30%-50%  better than those in the market at present.