GMO Internet Quits Bitcoin Miner Production After Recording Extraordinary Losses

News and Analysis

Japanese internet giant GMO Internet Group is quitting the Bitcoin mining hardware sector citing “extraordinary loss” in Q4 this year, Cointelegraph reported on Tuesday, December 25.

According to a public document, the Tokyo-based company will “no longer develop, manufacture and sell” miners.

“GMO Internet, Inc. resolved at the meeting of the Board of Directors held today to post an extraordinary loss in the cryptocurrency mining business for the fourth quarter (October 1, 2018, to December 31, 2018) of the fiscal year ending December 2018. These numbers are approximate values and may fluctuate, affected by the exchange rate,” the document reads.

The company added that taking into consideration changes in the current business environment, it thinks 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’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.”

The company will further relocate its mining operation “to a region that will allow us to secure cleaner and less expensive power supply.”

Notably, in November, GMO Internet 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).

In July, GMO launched GMO miner B3, a new, upgraded model of its Bitcoin miner equipped with 7nm ASIC mining chips. However, in November the company announced that it has postponed the shipments of both B3 and its predecessor, GMO miner B2, citing difficulties with acquiring some of the electronic components, such as resistors, due to the tight global supply-demand balance.

Today’s news makes GMO the latest casualty of the 2018 crypto bear market, with falling prices taking their toll on mining profitability. The decline has resulted in a similar drop in mining profitability and reportedly forced Chinese operators to sell their mining devices at a loss. Last month, 8BTC wrote that miners were being sold “by kilo,” citing a post made by the founder of F2Pool on the Weibo microblogging platform.

This was followed by news of redundancies from major Chinese miner manufacturer Bitmain. After closing down its Israeli operations earlier this month, this week, new reports suggested that the Beijing company laid off a team which was working on the development of a Bitcoin Cash client.

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