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In December 2017, cryptocurrencies were at their peak; however, just a couple of weeks later, they had suffered the largest downfall in crypto market’s lifetime in January 2018. Cryptocurrencies and digital assets suffered this downtrend throughout 2018. A year of underwhelming and even disappointing business has caused a number of big players to cut their losses and look elsewhere in 2019. The latest company to do so is GMO Internet.
The company announced that because of the weak crypto market it will stop making and selling crypto mining machines. GMO is to record an extraordinary loss of $321.6 million in 2018, partially consisting of impairment and ‘transfers of receivables’ losses. Their crypto mining business reported a loss of nearly $8.8 million in the second half of 2018.
The firm stated:
“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.”
However, the firm plans to continue its mining operations. After a review of revenue generated from these operation, GMO said that they might move their mining operations to regions with cleaner and cheaper energy. This move will help them counter the currently difficult conditions of the market as digital assets suffer from a worldwide investor hesitancy and unpredictable laws and regulations by the governing authorities.
When addressing their institutional investors, the firm said:
“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.”
GMO has reiterated their belief that their crypto exchange business has high growth potential and they will continue to position it as a growing sector for its future strategy.
Overall, in 2018 we saw many companies jump from the cryptocurrency and crypto mining ships which has always looked like sinking. However, that’s not to say that it’s time to ring the ‘end is nigh’ bells. Blockchain, the underlying technology of cryptocurrencies and digital assets, has seen a tremendous amount of progress in 2018. Many of the fortune 500 companies set plans into motion to adopt blockchain technology into their systems.
So, this is not an end of digital assets and decentralized web. We are merely witnessing a shift from how we’ve perceived and worked with distributed ledger technologies so far.