GMO shares hit year low today after losing $320 million in crypto mining

According to Nikkei News, GMO Group (9449, TSE) stock price fell sharply after opening today, once falling to 1,220 yen, down 105 yen (-7.9%) from yesterday's closing price, setting a new annual low. As of press time, the stock price was 1,339 yen.

Image source: Nikkei News

The sharp fluctuations in the stock price may be related to the public document released by GMO the day before (December 25), which disclosed that it lost 35.5 billion yen (US$320 million) in the fourth quarter due to mining business , calling it an "unusual loss" and saying that it will no longer develop, manufacture and sell crypto mining machines . However, GMO has not given up its in-house mining business and will move towards lower electricity prices.

Image source: https://ir.gmo.jp/en/pdf/irlibrary/gmo_disclose_info20181225_e.pdf

Let's take a look at the losses GMO suffered from its mining business in the third quarter. According to a previous report by Odaily Planet Daily, GMO's third quarter performance report for fiscal year 2018 released in November showed that in terms of mining business, GMO's mining revenue in the third quarter was 1.23 billion yen, an increase from the second quarter, but affected by the market environment (deteriorating external environment and increasing depreciation costs), the profit margin decreased month-on-month, and the loss in the third quarter was 640 million yen (the loss in the second quarter was 360 million yen).

The Japanese Internet giant GMO entered the crypto mining market in 2017. At that time, the market was booming. GMO announced the launch of its crypto mining business in September 2017, saying it intended to invest $90 million. At the end of 2017, GMO's internal mine began mining, and in May 2018, it mined 472 bitcoins and 37 bitcoin cash in one month.

In June 2018, GMO announced its first Bitcoin mining machine, the B2. It also said that the B2 mining machine is the world's first mining machine using 7nm ASIC chips. GMO's CEO said at the time, "Its B2 mining machine is intended to fight against Bitmain. If the mining machine cannot be sold, we can use them in our own mining business, so I think this is an impeccable business with no inventory risk."

However, in the second half of 2018, GMO was not the only company to suffer losses due to the sluggish crypto market. Bitmain, another competitor, was recently reported by the media to be laying off more than 50% of its AI teams in Singapore, Taiwan, Shanghai, and Beijing.