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).
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“By using Coinify, we are not running into the knife. It is still not clear to me how blockchain is any better than other database technologies. The transactions are so far more expensive and slower than a normal payment method. Decentralization brings only cumbersome improvements. None of the blockchains scale enough. But maybe I have not invested enough time and therefore understand too little how the blockchain ecosystem works.”Herren said that the decision comes after the prolonged bearish correction on the market where most of the crypto assets lost nearly a third of their value. Despite the fact that investors didn’t really get scared of the decline in prices, institutional adoption is still uncertain regarding making more profits. For example, back in 2018 in June, the Expedia hotel booking platform deleted Bitcoin out of their options and in the same year couple of months back, Reddit also stopped accepting cryptocurrency for its gold membership plans. Years back, Bitcoin became popular because of its attractiveness as a cheaper alternative for expensive payment processors. But as the technology got more popular, the network was unable to handle a higher number of transactions such as Visa or MasterCard and that’s why retailers didn’t choose crypto for making transactions. The Swiss retail giant brings bitcoin back into the retail game. However, traders who are into crypto or those who just hold on to it for better days can now use their coins to purchase something from the retail platform.
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