Japanese internet giant GMO has announced that it will no longer develop, manufacture, and sell cryptocurrency mining machines. The company will, however, continue to mine in-house but will relocate its mining center to a region with cleaner and less expensive energy.
Also read: Indian Supreme Court Moves Crypto Hearing, Community Calls for Positive Regulations
Exiting the Mining Equipment Business
GMO Internet Inc. announced on Tuesday following a board of directors meeting that it “will no longer develop, manufacture, and sell mining machines.” The company is posting an extraordinary loss of 24 billion yen (~$218 million) related to these activities for the fourth quarter of the fiscal year ending December 2018.
“Regarding the current mining machine markets, 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,” the announcement reads. After considering changes in the current crypto environment, GMO wrote:
The company expects that it is difficult to recover the cryptocurrency mining business-related assets through selling mining machines, so the company has decided to stop the development, manufacture, and sales of mining machines, thereby recording an extraordinary loss.
In addition, GMO noted that it has purchased mining machines and paid the costs required to manufacture its 7nm machines. With the decision to exit the manufacturing business, GMO revealed that it will transfer related assets held to MP18 Llc, a special purpose company of Tani Electronics Corporation.
GMO first announced the development of its 7nm bitcoin mining equipment in September last year. Miner B2, the first line of its mining equipment, went on sale in June for $1,999. Another line, Miner B3, went on sale in July for the same price. The first batch of B2s was supposed to be shipped at the end of October and B3s in November. However, to date, no mining machines of either type have been shipped.
For its in-house mining business, launched in December last year, GMO is posting an extraordinary loss of approximately 14 billion yen on an unconsolidated basis (11.5 billion yen on a consolidated basis) for the fourth quarter of the fiscal year ending December 2018.
The company explained that the profitability of its in-house mining business “decreased as the cryptocurrency price declined and our mining share did not increase as expected due to the rise of the global hash rate, which went beyond our initial assumption,” noting:
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 mined 696 BTC and 400 BCH in November. Its hashrate has been steadily growing as planned, its latest in-house mining report shows. “We will introduce the mining machine from other manufacturers to the in-house mining. Our plan is to see
our hash rate surpass 800 PH/s by the end of December,” the company said earlier this month.
In its Tuesday’s announcement, GMO noted that “Depreciation cost of mining machines and electricity cost comprise the majority of operating expenses,” elaborating:
In terms of the electricity cost, we will relocate the mining center to a region that will allow us to secure a cleaner and less expensive power supply.
What do you think of GMO exiting the business of manufacturing and selling mining machines? Let us know in the comments section below.
Images courtesy of Shutterstock and GMO Internet.
Need to calculate your bitcoin holdings? Check our tools section.
The post Japan’s GMO Quits Manufacturing and Selling Mining Machines appeared first on Bitcoin News.