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GMO's Cryptocurrency Business Made $2.3 Million Profit in Q2

Japanese IT giant GMO has just reported making an operating profit of 255 million yen (about $2.3 million) for its cryptocurrency business in the second quarter of this year.

The firm released its financial report following an earnings call on Thursday, which indicated that the company’s crypto segment made a total of 2.6 billion yen, or $23 million, in net revenue.

The amount generated in the crypto segment was almost equally split between the mining and exchange businesses, which accounted for 47 and 53 percent of the net revenue, respectively.

That said, with operating costs mounting to $21 million in just three months, GMO recorded a relatively small margin of $2.3 million, or 10.95 percent. However, the figure looks more respectable when placed in the context of GMO’s net loss of $6.6 million in the first quarter – mainly due to negative revenue suffered by its exchange business in the first two months of this year.

Although GMO didn’t provide a breakdown of the operating costs for the crypto segment in Q2, it did indicate that a notable portion arises from the mining side of its business.

“Although the expansion and mining equipment progressed as planned and recorded sales of 1.2 billion yen, mining profitability declined due to deterioration of the macro environment such as stagnation of bitcoin price as well as the increase of hash rate,” the report said.

Indeed, according to GMO’s latest mining report, dated Aug. 3, the firm appears to have increased its mining capacity in the second quarter. For instance, the company mined 512 bitcoins in the first quarter – less than the 528 bitcoins GMO mined in June 2018 alone.

Notably, those figures come soon after the launch of GMO’s own 7nm bitcoin miners, which were touted as having higher hashing power alongside lower electricity demands.

Before now, the only previous profitable quarter for GMO’s fledgling crypto business was Q4 2017, a time when bitcoin prices soared to a record high of nearly $20,000.

Japanese yen image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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A New Calculator Aims to Stop Miners From Getting Ripped Off

“We joke about it being bitcoin’s ‘unprofitability’ calculator.”

RandomCrypto CEO Josh Metnick is talking about his newly released calculator used as a tool for predicting the profitability of bitcoin mining – the process of solving puzzles to earn bitcoin, usually only possible with expensive processors called ASICs.

Revealed exclusively to CoinDesk, Metnick hopes this new calculator will improve on the calculators out there, which he thinks don’t depict the full truth on whether mining equipment is worth buying and using. Using its new measurements at today’s prices, RandomCrypto’s calculator shows that all of the most popular mining hardware is unprofitable.

That includes Bitmain’s flagship S9 and GMO’s new 7nm B2, he claims.

As such, Metnick and the RandomCrypto team are releasing this calculator to give customers another tool.

“Our goal is not to show mining as profitable or unprofitable – our goal is to bring more truth, accuracy and transparency to [proof-of-work] mining. Sometimes mining is profitable, and sometimes it isn’t. The bigger picture is to create tools and reporting systems to keep the hardware manufacturers honest,” Metnick told CoinDesk.

It’s a project dear to his heart too, as he’s been actively mining since 2013.

Metnick said:

“This calculator is born of many years of getting screwed in numerous ways by mining companies.”

Metnick’s quick to point out previous mining scams in the industry as examples of where the industry leaves transparency  and honesty to be desired.

“I spent a good portion of my life – years, really, many years – trying to chase down Butterfly Labs, Advanced Miner, and KnCMiner for the millions of dollars I sent them before they absconded with my life savings,” he said.

A different calculator

Online calculators let you input a bunch of variables like electricity cost, hardware cost and so forth, then output how much revenue these variables should lead to, based on the value of bitcoin at the time.

The ingredient Random Crypto Inc. calculator adds is pretty simple, but it’s new.

“What we have found, over several years now of observations, is that all of the major bitcoin mining calculators out there show bitcoin mining output as ‘profit,’ instead of what it really is: output,” Metnick said.

One key thing these calculators don’t include is bitcoin’s programmed-in “difficulty” rating – the higher the difficulty, the more power it takes to solve the puzzle required to mine bitcoin. So far, difficulty has grown exponentially with time.

Sites like CryptoCompare and CoinWarz show difficulty as a static variable, based on what it rings in on any day.

Metnick argues that because the rapid growth in difficulty isn’t factored into such calculators, it makes mining machines look more lucrative than they really are.

The RandomCrypto team further argues that if difficulty has grown exponentially so far, this trend is bound to continue as it has for the past nearly 10 years, and calculators need to incorporate this fact.

“Mining difficulty has been growing exponentially since the advent of bitcoin. To deny this, or not incorporate this fact, this reality, into a mining calculator, should be illegal,” Metnick argued.

CoinWarz declined to comment on CoinDesk’s inquiries, while CryptoCompare did not respond before press time.

Impossible to predict?

Metnick singled out the China-based mining company giant Bitmain, because it’s drawn so much attention recently for its vast profits.

“As of the writing of this email, and price of bitcoin, there is not a single manufacturer selling an ROI [return on investment] positive machine at the retail level. Take a moment to pause on that… especially with the Bitmain IPO coming out,” he argued. “None of Bitmain’s products make money for their customers.”

At least, according to the new calculator, that is.

But, is this really possible to predict? Although bitcoin’s difficulty has grown rapidly the last 10 years, there’s no way to know for sure that this trend will continue.

“It’s not as predictable as the sun, moon and the stars. But it is predictable within a tight range of specificity,” Metnick said. Using historical data they pulled together an algorithm that’s been quite accurate so far, he continued, adding:

“The models we coded on May 8 have not changed, and we have been within 1 percent accuracy.”

Money in trash image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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A New Bitcoin Mining Calculator Aims to Tell 'Truth' on Profitability

“We joke about it being bitcoin’s ‘unprofitability’ calculator.”

That’s how CEO of RandomCrypto, Josh Metnick, described his newly released tool that calculates the profitability of bitcoin mining – the process of solving puzzles to earn bitcoin, usually only possible with expensive processors called ASICs.

Revealed exclusively to CoinDesk, Metnick hopes the new calculator will improve on other tools out there, which he thinks don’t depict the full truth on whether mining equipment is worth buying and using. For example, using its new measurements at today’s prices, RandomCrypto’s calculator shows that all of the most popular mining hardware is unprofitable.

That includes Bitmain’s flagship S9 and GMO’s new 7nm B2, he claims.

“Our goal is not to show mining as profitable or unprofitable – our goal is to bring more truth, accuracy and transparency to [proof-of-work] mining. Sometimes mining is profitable, and sometimes it isn’t. The bigger picture is to create tools and reporting systems to keep the hardware manufacturers honest,” Metnick told CoinDesk.

Metnick’s quick to point out previous mining scams in the industry as examples of where the industry leaves transparency and honesty to be desired.

“I spent a good portion of my life – years, really, many years – trying to chase down Butterfly Labs, Advanced Miner, and KnCMiner for the millions of dollars I sent them before they absconded with my life savings,” he said.

Because Metnick himself has been actively mining since 2013, it’s a project that’s dear to his heart.

Metnick told CoinDesk:

“This calculator is born of many years of getting screwed in numerous ways by mining companies.”

A different calculator

Online calculators let you input a bunch of variables like electricity cost, hardware cost and so forth, then output how much revenue these variables should lead to, based on the value of bitcoin at the time.

The ingredient RandomCrypto’s calculator adds is pretty simple, but it was never deployed in existing models, Metnick said.

“What we have found, over several years now of observations, is that all of the major bitcoin mining calculators out there show bitcoin mining output as ‘profit,’ instead of what it really is: output,” Metnick said.

One key thing these calculators don’t include is bitcoin’s programmed-in “difficulty” rating – the higher the difficulty, the more power it takes to solve the puzzle required to mine bitcoin. So far, difficulty has grown exponentially with time.

Sites like CryptoCompare and CoinWarz show difficulty as a static variable, based on what it rings in on any day.

Metnick argues that because the rapid growth in difficulty isn’t factored into such calculators, it makes mining machines look more lucrative than they really are.

The RandomCrypto team further argues that if difficulty has grown exponentially so far, this trend is bound to continue as it has for the past nearly 10 years, and calculators need to incorporate this fact.

“Mining difficulty has been growing exponentially since the advent of bitcoin. To deny this, or not incorporate this fact, this reality, into a mining calculator, should be illegal,” Metnick argued.

CoinWarz declined to comment on CoinDesk’s inquiries, while CryptoCompare did not respond before press time.

Impossible to predict?

Metnick went on to say that, based on bitcoin’s price at the time, smaller scale mining is basically not profitable currently.

“As of the writing of this email, and price of bitcoin, there is not a single manufacturer selling an ROI [return on investment] positive machine at the retail level. Take a moment to pause on that,” he argued.

At least, according to his new calculator, that is.

But, is this really possible to predict? Although bitcoin’s difficulty has grown rapidly the last 10 years, there’s no way to know for sure that this trend will continue.

“It’s not as predictable as the sun, moon and the stars. But it is predictable within a tight range of specificity,” Metnick said. Using historical data they pulled together an algorithm that’s been quite accurate so far, he continued, adding:

“The models we coded on May 8 have not changed, and we have been within 1 percent accuracy.”

Calculator image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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GMO Launches Mobile App That Lets Gamers Earn Bitcoin

Japanese technology firm GMO Internet Group has developed a new mobile app that lets users earn bitcoin simply by playing games, the company said on Thursday.

According to an announcement, the new app – called CryptoChips – will initially be integrated with a real-time territorial battle game also developed by GMO called “Whimsical War.”

By playing the game on an iOS or Android device starting from August of this year, users can be rewarded with bitcoin based on their ranking and missions achieved inside the game.

Rather than using on-device mining to earn the cryptocurrency, players will receive their bitcoin rewards directly from GMO. The firm kicked off its own bitcoin mining operations in December 2017, and has also slated in August as the deadline for the launch of its cloud mining service.

The tech giant said in the announcement that the hope is to encourage the public to become familiar with cryptocurrencies via the new app, since users will need to use their own digital wallets to receive and use the bitcoin.

GMO indicated that, moving forward, it may include support for more cryptocurrencies within the app and also expand its integrations across other mobile games.

The new service comes just a week after GMO announced that it is launching the world’s first 7nm bitcoin mining chip, with a target shipment deadline set for the end of October 2018.

Mobile game image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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GMO Has Mined Millions of Dollars in Bitcoin Already

The cryptocurrency mine launched by Japanese IT firm GMO Internet has generated more than $3 million in revenue over the past three months.

According to a mining report released on March 5, the publicly-traded company disclosed that it had generated 23 BTC, 93 BTC and 124 BTC in December, January and February, respectively. All told, those coins are worth approximately $2.67 million as of press time according to CoinDesk’s Bitcoin Price Index.

In addition, the firm further reported a total mining income of 525 bitcoin cash during the same period, an amount valued at $654,000 at current prices. All told, GMO’s mining venture brought in a little over $3.3 million in revenue within months since its start.

That said, the data provided by GMO doesn’t offer a complete picture of the mine’s financial status, including the cost at which those coins came. It’s unclear whether the number of cryptocurrencies brought in exceeded operating expenses at any point during the three-month period.

GMO’s report also detailed its growth in processing capacity.

With a most-recent hashrate of 108 petahashes per second (PH/s) by the end of February, GMO has set a goal of achieving 3,000 PH/s within this year. Currently, the bitcoin network boasts a hashrate of 22,125 PH/s, based on data published by Blockchain.

As reported before, the firm initially unveiled the plan to launch its mining unit last September, which officially went live by the end of last year in northern Europe.

Past statements indicate that the mine will likely see additional revenue sources starting later this year. GMO said in February that it also aims to step up the effort by offering cryptocurrency cloud mining services in August this year.

Bitcoin mining miniature image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.

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GMO Internet Eyes August Launch for Crypto Cloud Mining Service

GMO Internet, a publicly listed IT firm headquartered in Japan, has set August as the tentative launch date for its previously announced cloud mining service.

The company revealed last fall that it was devoting tens of millions of dollars to its mining venture, with the aim of building a site for pursuing the energy-intensive process by which new transactions are added to a blockchain and new coins are minted as a reward. With cloud mining, customers can purchase hashing power and receive the rewards of that process, minus any associated fees  – though the model has long been associated with fraud, including companies that sell more processing power than they actually possess.

In a Feb. 9 announcement, GMO said that it would, beginning in March, hold a series of events in order to drum up interest in the service, which will feature 2-year contracts at a whopping $5 million USD per contract. Though the exact location of the GMO mine isn’t publicly known, the facility is said to be based in northern Europe.

“We have already been receiving inquiries about our cloud mining service, so from March 2018, GMO Internet will hold the information session in 9 cities to meet the needs of the companies or businesses worldwide who have announced their intention to participate in the cloud mining,” the company said.

GMO described the August launch timeline as “tentative.”

Notably, the firm will use some of the tokens mined at the facility for its GMO Coin exchange “in order to “contribute to an increase in diversity and liquidity of the cryptocurrency market.”

The Tokyo-based company has made a number of announcements related to the technology in recent months. These notably include a bitcoin-based payroll system, which it said would be made available to its own employees. GMO has also unveiled services built around know-your-customer and anti-money laundering tools.

Image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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GMO ICO? Bitcoin-Friendly IT Firm Announces Token Sale

Japanese IT firm GMO is adding another twist to its ongoing cryptocurrency initiative: a plan for an initial coin offering (ICO).

The token sale was disclosed in an announcement on Tuesday. Though some of the finer details remain unclear, the company – which previously revealed plans to open up a cryptocurrency mine and an accompanying cloud mining service – is planning to use the token as part of a payment system for an upcoming series of products.

In statements, the firm said that it would follow the applicable laws as it moves to launch and sell the token, explaining:

“We will consider properly the laws and regulations that are applicable to us under the current legislation including Payment Services Act and the Financial Instrument and Exchange Act, and will be conscious of the protection of token purchasers and stakeholders’ profits when designing the token sale.”

The coin will be redeemable for GMO’s new mining board, which the company projects will be capable of 10 terahashes/second per chip, according to an announcement from Tuesday. These board will also use less power compared to similar chips on the market, the firm claimed.

GMO projects to launch its own mining operation somewhere in Europe by the end of December.

It’s uncertain at this time whether or not GMO’s token would be based on an existing blockchain or if it would seek to launch its own protocol. The company was not immediately available for comment.

GMO Internet image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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$90 Million Budget: Japan's GMO Reveals More Cryptocurrency Mining Details

Japanese digital services firm GMO has divulged additional plans for its forthcoming cryptocurrency mine and the $90 million budget backing it.

According to TechWave, on Wednesday the company held a presentation on the plan following its announcement last week. GMO, which was founded in the 1990s and already operates its own cryptocurrency exchange, said it would begin mining – an energy intensive process by which new transactions are added to a blockchain –in the first half of 2018.

In the presentation, GMO representatives said that it would begin testing a new 7nm semiconductor chip by the spring. To date, according to the demo, GMO has already spent $3 million out of an expected 10 billion yen (worth approximately $90 million). That initial funding has been spent to kickstart the chip development as well as work on the facility itself, according to the report.

GMO representatives announced the datacenter, which will be built in northern Europe, and its purpose last week, marking the first time a major internet company jumped into the cryptocurrency mining market.

According to GMO President Masatoshi Kumagai:

“Besides mining at our company, we also plan to sell the mining board with the ‘cloud mining center’ [so] that anyone can participate in mining.”

GMO is not the only company to get involved in cryptocurrency mining. Japanese e-commerce giant DMM announced they would also be getting involved with the business. They plan to begin testing in October, and may enter full production by the end of 2017.

Editor’s Note: Statements in this article were translated from Japanese.

Datacenter image via Shutterstock.

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Japan's GMO Internet Reveals Cryptocurrency Mining Plan

Japanese firm GMO Internet has announced the launch of a new cryptocurrency mining business.

GMO, which was founded in the early 1990s, first entered the cryptocurrency space with the opening of an exchange in May. Now, the company, which offers web hosting and a range of other digital services, is expanding its portfolio with the mining operation, which is set to commence sometime in the first half of 2018.

According to statements from GMO, the mining facility is set to be based somewhere in northern Europe and will produce as much as 500 petahashes per second (PH/s). Currently, the bitcoin network hashrate is approximately 5.68 exahashes per second (EH/s).

It’s a notable launch, given that GMO is an established digital services firm with a publicly listed stock.

GMO said also that it plans to “research and develop semiconductor chips (mining chips) utilizing state-of-the-art 7nm process technology,” working with as-yet-unnamed partners on the venture. Additionally, the firm indicated that it may move to sell the hardware it creates to third parties.

Further down the line, GMO indicated it plans to begin offering cloud mining services, through which customers can buy a certain amount of hashrate over a period of time to potentially earn bitcoin. Notably, the company also plans to use the mine to support its cryptocurrency exchange, with the coins generated being used to provide liquidity for its marketplace.

The announcement comes on the heels of another blockchain-based loyalty point project from GMO.

Cryptocurrency mining is the energy intensive process by which new transactions are added to a blockchain, creating new coins as a reward in the process.

Bitcoin mining image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at [email protected].