The Japanese IT giant GMO is in today’s Bitcoin news, this time for a breaking announcement in which it stated that it will quit making and selling Bitcoin and crypto miners following a year of bear market losses.
As the firm announced on Tuesday, due to the “increasingly competitive” environment and weak crypto market, it will ““no longer develop, manufacture, and sell mining machines.”
GMO is to record an “extraordinary loss” of 35.5 billion yen (which is approximately $321.6 million) consisting of impairment loss and losses from transfers of receivables which are right now approximately $104.2 million and $217.4 million respectively, mostly due to the sales of relevant assets.
As the announcement read:
“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.”
The mining company first launched its miner making business in September 2017 and set up the operations in northern Europe at the end of last year. The decision to quit the business comes months after its new miner named “B3” packed with a 7nm mining chip.
“We are currently operating mining machines, and the depreciation cost will be almost zero after recognizing the impairment loss. Therefore, we will continue running mining operations if we can ensure that the revenue exceeds the electricity cost,” the firm summed up in a conference call for institutional investors on Tuesday.
The overall loss right now is more than 640 million yen ($5.6 million) in Q3 of 2018 alone, after a drop of $3.2 million in the previous quarter (Q2).
Chinese Companies Won’t Follow Facebook’s Crypto Adventure
“The technology [of Facebook] is already mature enough so it’s not difficult [to implement]. Now it just depends on whether it can obtain regulatory approval.’’Tencent did not comment any further on the issue but stated that the CEO made a remark back in 2018 that the company’s stance on cryptocurrency is:
“The greatness of blockchain technology depends on how it’s used. Issuing initial coin offerings or digital currencies still bear too much risks … Tencent will not issue a coin and does not consider to be involved in that.”Some of the other Chinese companies including the Ant Financial and the CEO Eric Jing noted that the company has already declared back in 2018 that they would stay away from digital currencies and will mainly focus on blockchain technology. While Ant Financial that operates AliPay is successfully expanding overseas, it is using a conventional strategy of partnering with multiple regional payment providers rather than issuing its own cryptocurrency. The reason why the payment Chinse companies are not considering crypto as useful, mainly focus on the regulatory issues since the country’s central bank banned crypto offerings back in 2017. The vice president of the Chinese Software Developer Network Yan Meng who is focusing on token economic research says that Facebook’s user base across the world leaves no other option than to borrow ideas from blockchain and crypto in order to get as far as possible from the traditional way for launching a global payments network. He said:
“Facebook just can’t do a global payments network via traditional methods, which require applying for a license and preparing foreign exchange reserves with local banking, one market after another.’’As noted in some of the best cryptocurrency news sites, the People’s Bank of China reported that the country reached a $41.51 trillion in mobile payments in 2018 alone and AliPay accounted for more than 90% alongside WeChat Pay.
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Federal Reserve Not Worried About Facebook’s Crypto
“I think we’re a long way from that…Digital currencies are in their infancy. So essentially, [I’m] not too concerned about central banks no longer being able to carry out monetary policy because of digital currencies or cryptocurrencies.”Regulating the crypto project is not on the Federal Reserve agenda because the agency does not have the needed authority to do so. Powell noted that the FED doesn’t have the plenary authority over cryptocurrencies as such. He also stated that cryptocurrencies play an important role in our world today and this is why consumer protection is needed. It is also important to prevent money laundering but Powell noted that the international forums have a bigger impact in the payments systems around the world and play an important role in the payment system of the United States. Powel continued:
“There are potential benefits here; there are also potential risks, particularly of a currency that could potentially have large application. We will wind up having quite high expectations from a sort of a safety and soundness regulatory standpoint if they do decide to go forward with something.”The Federal Reserve chairman acknowledged the fact that the FED does meet with the private sector quite often and the companies form the sector to discuss future fintech plans including blockchain technology and cryptocurrency. The Fed also is not the first agency that met with Facebook and discussed the controversial crypto project. Powell concluded:
“Facebook, I believe, has made quite broad rounds around the world with regulators, supervisors, and lots of people to discuss their plans and that certainly includes us. That’s something we’re looking at. We meet with a broad range of private sector firms all the time on financial technology and there’s just a tremendous amount of innovation going on out there.”As noted in the coming altcoin news, the Federal Reserve reported earlier this week that the interest rates would remain unchanged despite the recent developments on the market.
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