Though there is some revival for crypto traders, things look far from improving for miners and mining equipment manufacturers. According to the recent news flow coming from Japan, Japanese internet giant GMO Internet Group is closing down its crypto mining hardware business.
Why GMO had to close the bitcoin miner production business?
According to the press release that was issued on the Christmas day, Japan’s GMO Group announced that the Board of Directors of the company have resolved 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.
On a consolidated basis, the total mining business reported a loss of JPY 35.5 billion. The breakup of which is as follows
- In-house mining – Impairment loss of JPY 11.5 billion
- Development, manufacture, and sales of mining machines – Losses of JPY 24 billion
On the non-consolidated basis, the losses just Shoot up to a total of JP 38 billion. The break up of the same is as follows
- In-house mining- loss on sales of stock of subsidiaries of JPY 14 billion
- Development, manufacture, and sales of mining machines- Losses of JPY 24 billion
The press releases further states that,
“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. After taking into consideration changes in the current business environment, 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.”
Things were completely opposite the previous quarter for GMO as the company has reported strong performance of its cryptocurrency projects in Q3, which included mining hardware sales. Profits had totaled JPY 2.6 billion.
That’s not been the case only with GMO. Recently Bitmain also closed down its Israeli operation due to unviable mining operations. It also laid off its complete staff from the West Asian country.
On the Western Hemisphere, a similar effect was felt as investors mercilessly dumped Nvidia’s stock in the last quarter of 2018, knocking the stock price by 54 percent, making it the worst performer in the S&P 500 over that same period.
The market has begun its upward journey and everyone can just hope things to improve for the mining industry and mining hardware manufacturers. How soon will it happen is something that one will have to wait and watch.
Will GMO reconsider entering the crypto mining business ones the market improves? Do let us know your views on the same.