Japan-based GMO Internet Inc. (TYO: 9449) incurred an operating loss of ¥1.3 billion (~$11.75 million) in the fiscal year 2018.
The IT company published its financial performance on Tuesday, saying that its cryptocurrency verticals, including a bitcoin exchange and mining business, posted circa $74.44 million worth of net sales. The report clarified that while its exchange business was able to build a revenue base, the mining side fared poorly. In total, the firm’s mining business structure recorded a standalone loss of circa $18.3 million in 2018.
$319.2 million in Extraordinary Losses Excluded
GMO financial report also clarified that its mining output didn’t include “extraordinary losses” of circa $319.2 million. In December 2018, the firm had announced that it was closing down its mining operations. At that time, the decision would incur a ¥35.5 billion worth of extraordinary losses as GMO would quit the development, manufacture, and sales of mining equipment.
On Tuesday, the company explained that their mining share didn’t increase as expected due to the overlong bearish bias in the bitcoin and cryptocurrency market. It also blamed the rise of global mining hash consumption for its negative output.
At the same time, GMO announced that it would implement a policy change in matters related to their mining business model than an overall shutdown. The firm said that it would sell its bitcoin mining assets at cheaper rates to compensate for a portion of its annual losses.
GMO also announced that it would shift its mining centers to a region which offers them a cheaper and cleaner power supply. The company didn’t reveal to where exactly it would relocate. However, it said that its new mining center would be somewhere in Northern Europe.
As CCN reported, GMO had already launched mining centers in Europe in December 2017. Even then, the firm had not disclosed the locations of their facilities.
Bitcoin Exchange Business Also Hit
GMO posted close to 7% profits from its cryptocurrency exchange GMOCoin on an annual basis. At the same time, the company noted its quarter-revenue had come down 66.7%.
Per the historical performance, GMOCoin recorded a net sales of ¥4.02 billion, circa $36.33 million, throughout the fiscal year 2018. In the first quarter, the exchange faced a ¥76 million operating loss against a relatively meager ¥19 million sales. It was also the time when the cryptocurrency market had begun correcting from its all-time high. The market would eventually lose 1/3rd of its value by the end of the year.
The next financial quarters saw high sales compensating for the losses incurred during Q1 losses. Each phase ended on a lower note than a previous one in terms of sales, while the profits remained marginal. In Q4 only, the gains dropped 67.5% QOQ.
New Crypto Product in Line
GMO Internet announced in October 2018 that it would start issuing a Yen-pegged stablecoin in 2019. As CCN reported, the firm would branch in its remittance and settlement services to its stablecoin project.
The decision followed an increase in demand for stable cryptocurrencies following the crypto market crash of 2018. Traders are continually looking for fiat alternatives to peg their crypto assets in times of volatility. As of now, Tether’s USDT leads the stablecoin market, but its shady history has prompted users to look for alternatives. It has led to the rise of over 57 stablecoin projects, with 23 of them already in circulation.
Newsflash: Bitcoin Unicorn Circle Launches USD-Pegged Cryptocurrency https://t.co/HoZKLA6MLR
— CCN Markets (@CCNMarkets) September 26, 2018
As GMO joins the long list of stablecoin issuers, the firm would expect to improve its crypto business revenue in the ongoing financial year. For now, the company appears hurt like its peers across the crypto mining industry, mainly Bitmain.