DMM.com, a major Japanese e-commerce and entertainment conglomerate, is reportedly exiting the cryptocurrency mining business because of “deteriorating profitability,” local media reported on December 30, 2018. The company decided to pull out of mining as early as September and expects to complete the sale of its mining machines by the first half of 2019.
“The withdrawal process such as the sale of the machines will go over to the first half of 2019,” DMM was quoted as saying. Founder Keishi Kameyama stated on December 31 that he will “work hard on [the] exchange [business] and blockchains” going forward. DMM Bitcoin, a subsidiary, is one of Japan’s 16 licensed cryptocurrency exchanges.
Ambitious Mining Plans Fall Short
DMM launched its virtual currency division in September 2017 and began mining operations in Kanazawa city the following month, mining multiple cryptocurrencies including Bitcoin, Ethereum, and Litecoin. The company initially set ambitious goals, aiming to operate “a mass-scale, made-in-Japan quality, mining farm whose operating size will be unmatched by any of the domestic operators” and to rank among the “top three of the world’s mining farm companies in terms of scale.” It also established a research lab called DMM Mining Labo.
In February 2018, DMM announced plans to open a public showroom at its Kanazawa mining facility, intending to operate 1,000 mining machines in a 500-square-meter area starting April. However, the showroom was canceled in early June due to security concerns. “Overseas, theft of virtual currency mining machines has been steady, and [there were attempts] even at the DMM’s Kanazawa farm,” the company explained. Additionally, the launch of its crypto trading app Cointap was shelved, with DMM noting that the decline in cryptocurrency prices and the Coincheck hack made it difficult to attract beginner traders.
Industry-Wide Cooling in Japan
DMM’s exit came less than a week after another major Japanese firm, GMO Internet, announced it would stop manufacturing and selling mining machines, though it continues in-house mining and plans to relocate its mining farm. GMO cited decreased demand due to falling cryptocurrency prices and intensified competition in the mining machine market.
The moves highlight the brutal crypto winter that has hammered mining profitability globally. With Bitcoin prices plummeting over 70% from their 2017 peak, many Japanese miners have been forced to scale back or exit entirely. DMM’s withdrawal signals that even well-funded conglomerates are reassessing their crypto mining strategies, and the trend may accelerate as the bear market persists.