Japanese IT giant GMO Internet Inc. is walking away from the cryptocurrency industry, announcing that will no longer develop, manufacture or sell bitcoin mining hardware.
The decision, while directly related to the precipitous drop in the price of bitcoin this year, was specifically attributed to GMO Internet being forced to record a massive loss in its cryptocurrency division.
On a consolidated basis, GMO Internet reported a loss of 35.5 billion yen ($321 million) in the fourth quarter with a 24 billion yen ($217 million) loss coming from its hardware arm and 11.5 billion yen ($103.5 million) loss coming from its in-house mining division.
“After taking lots of insurance and consideration changes which is in the current environment of business, 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 recorded and decided to record some of the more extraordinary loss,” the company revealed in a statutory filing which is also moreover reported Wednesday by the report which has been revealed.
GMO Internet itself is a broad-reaching Japanese tech firm with interests in online advertising and media, internet financial services and mobile entertainment. Its entry into the cryptocurrency market, however, was poorly timed.
It debuted in September 2017 at the height of the cryptocurrency bubble with an in-house designed 7-nanometer bitcoin miner. The cryptocurrency market peaked in late December 2017 and early January 2018, with prices crashing by more than 80 percent and more in some cases since then.
GMO Internet may survive its exit from the cryptocurrency mining business, but market leader Bitmain Technologies Inc., the company GMO was attempting to mimic, is in all sorts of trouble.
On Christmas Day, it was reported that Bitmain was in the process of laying off up to half its staff, amid reports of bitcoin mining companies declaring bankruptcy and bitcoin mining equipment being sold for scrap. Unlike GMO Internet, Bitmain doesn’t have an alternative business it can fall back on if cryptocurrency prices continue to plunge.