In a document released yesterday by Japan-based internet corporation GMO Internet Inc., the internet giant reported a financial loss of JPY 35.5 billion in Q4 2018 alone leading to the unsustainability of its cryptocurrency mining business.
The company described the loss as an “extraordinary loss” during a meeting of its Board of Directors. It would seem the market conditions of 2018 had a huge impact on the economics of the company, as it said that the profitability of the in-house mining business of GMO Internet Group decreased in tandem with the price decline in cryptocurrencies.
According to the document, the in-house mining on the consolidated account had an impaired loss of JPY 11.5 billion while the development, manufacture, and sales of mining machines returned a loss of JPY 24 billion.
The company recognized an intense competition in the “mining machine market” due to cryptocurrency price dip, as well as miners turning to second-hand sale/purchase of mining rigs, ultimately leading to cheaper hardware.
As for the in-house mining which was set up in December 2017, operations have not been favorable with expectations cut short due to the rise of the global hash rate.
On the basis of the current financial situation of the company, it has therefore decided to cease the manufacture and sale of mining rigs, while it moves its in-house mining operations to another location with cleaner and less expensive power supply.
In a follow-up Q&A document compiled during a conference with institutional investors, when asked about the outlook for 2019, the company responded that “GMO Internet will review the revenue structure of its in-house mining business, and continue running mining operations with the GMO Internet as a headquarter,” the document reads.
The company has also announced that sale of shares from its subsidiaries “GMO Financial Holdings (September 25, 2018) and GMO Payment Gateway (December 17, 2018)” increased significantly and that it was not reported as a consolidated gain.
The downward trend in cryptocurrency market this year has taken a toll on many crypto-related industries and GMO happens to be another victim of the prolonged bear market.
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