The latest in a string of companies pulling the plug on their cryptocurrency-related business has come from Japanese IT giant GMO Internet. The company said in a regulatory filing that as the price of cryptocurrencies continues to take a downturn, the profitability of its cryptocurrency-focused mining chips mirrors the same trend. The news was first reported by Cointelegraph Japan.
“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 filing states.
GMO’s exit from the cryptocurrency markets is a costly decision and comes a little over a year after the company announced their arrival in the segment. However, the fact that GPU-makers, including big names such as Nvidia, are waning out of the markets was not completely unexpected.
According to the same filing, the company expects its cryptocurrency mining division to post an extraordinary loss of JPY 35.5 billion ($318 million). And as there are no signs that the mining industry is improving, GMO will no longer “develop, manufacture, and sell mining machines.” It further explains:
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“In-house mining business: impairment loss, etc. of JPY 11.5 billion – Development, manufacture, and sales of mining machines: losses from the transfer of receivables, etc. of JPY 24.0 billion due to the sales of relevant assets.”
However, the company will continue in-house mining operations with the GMO Internet but will relocate the mining center to another region to secure less expensive power supply.
User interest in mining decline
GMO’s mining business posted a loss of over $5.5 million in Q3 2018, which was $2 million higher than the loss the company incurred in the second quarter.
The report states that a key reason behind GMO’s exit from the cryptocurrency mining business is that it has come to understand that the user interest in this sector is declining. This decision comes in the same year when GMO released its 7nm bitcoin miner, which has been touted as a game-changer thanks to its higher hashing powers and lower electricity consumption relative to other competitors’ devices.
GMO Internet has already its own cryptocurrency exchange, GMO Coin, and it opened a Bitcoin mining operation in September 2017. The giant Japanese company also offers products such as online advertising, internet infrastructure, internet security, and mobile entertainment. GMO Click Securities has been the world’s largest FX provider by trading volume since 2012.