GMO Internet, Inc. has hosted briefing session regarding mining of virtual currency (Bitcoin mining) on September 13. This market entry move has already been announced on 7th, and this press conference by Kumagai Masatoshi, CEO and President of GMO Internet, Inc. has been the center of wide attention recently.
Kumagai has written in his blog on Sept. 8th, “The Internet securities, Forex, Clearance, Bitcoin trade, and Netbank to open next year. We will link (the mining business) with these businesses and provide service which is cheap, fast, convenient and reliable.”
At the start of press conference, regarding the motivation behind this market entry Kumagai said, “The Internet has made the world flat, especially in the sense of informatization. And recently, values of people and things are being replaced by virtual currency which is digitized currency and beginning to be circulated as global currency, creating borderless economic zone. In other words, virtual currencies can be seen as infrastructure of new economy. From here on, just as informatization has made the world flat, worldwide common economic zone will evolve with virtual currencies, and our entry to mining industry as a Japanese company will surely be a worthwhile one.”
Kumagai said the problem with mining business is its contribution to global warming and stated that his company will try to solve this in its operation. He mentioned these two solutions:
Cutting edge semiconductor chip for mining, running in low power
Deploying business in Northern Europe where renewable energy is readily available
Also, he referred to the fact that in the past, conglomerates came into being by mining gold and silver and diversifying businesses with that fund, and Levis expanded its business with California Gold Rush. Similarly, he stressed the significance of mining by his company itself, and also providing cloud mining service and sale of mining boards.
Toshiaki Horiuchi (Managing Director and CTO, Next Generation Systems Laboratory Office Manager) has also commented that the company has been managing and operating tens of thousands of servers as well as networks and security, and also has been analyzing big data for Forex and recently has taken on AI analysis. There aren’t that many companies in the world with that kind of experience and expertise, therefore the company has advantage in mining business as well.
According to Masafumi Okumura (head of mining business), mining business has the following three focal points.
How many hi-spec computers can be utilized.
How power consumption can be reduced.
How cheap electricity can be procured.
Power consumption, he projected, can be cut by more than 56%, from 1150W of conventional products to below 500W.
Mining by the company is planned to start in first half of 2018, while dates for cloud mining are not specified. As for cloud mining, the company plans to gain enough mining experience first, and after establishing stable operation and sufficient performance, start offering the service to the public. By combining with GMO mining pool (tentative name), customers with less commitment can still receive stable earnings, according to the company.
The timing of sale and pricing of boards, which is on the minds of many, are not set yet, the company said. The pricing will take the competitors into consideration, according to the company. Even the boards sell in small quantity like one or two, the company still expects stable revenue by combining with mining pool.
Kumagai said while the mining chip is manufactured within Japan, “the contract is exclusive and we have non-disclosure obligation.” Also as for manufacturing of 7nm chip, he said “Although I am obligated to keep confidential, there are only about three companies capable of manufacturing 7nm, and this is one of them,” without disclosing company name.
Also, Kumagai stated, “We are newcomer to mining business, so we will move forward as we learn from Bitmain and members of the community. We don’t dare to say we try to beat them all. 7nm could be world’s first as commercial chip. Speed will be our advantage.” He mentioned with confidence.
About Bitcoin community, he expressed humbleness and said, “we are newcomer, we would like to learn first. Rather than wanting to wield influence, we simply want to contribute to the growth of the virtual currencies industry and development of mining industry. The Internet industry had community and we were contributing to the development of the industry. GMO as a company is the result of that.”
Regarding significance of starting cloud mining, Kumagai confessed that “I have been investing in Genesis Mining, the world’s largest cloud mining company personally with my own Bitcoin, doing cloud mining” and said “Bitcoin and virtual currencies are decentralized. The design philosophy is that its significance lies in people all over the world supporting this industry. Our cloud mining service will contribute to that design philosophy. By providing cloud mining which uses chip developed by us, anyone in the world who has Bitcoin can take part in mining.”
As for where the mining operation is located, he said “We researched all over the world for data center location. This location itself is source of our competitiveness, so I would like to keep secret,” but he disclosed that “the data center will have the electric utility expense that is one-third of Japan.”
Regarding halving of Bitcoin, he said, “We will keep the cost low. Mining business is simple as business type with fewer parameters, so by keeping the cost low, we can stay in business the longest. The risk of this business is, virtual currencies forbidden everywhere in the world, and none remain in existence. With our policy of running the operation with the lowest cost, I think halving will be our opportunity,” mentioning that cost reduction will determine the outcome of the game.
About the timing of market entry this time, Kumagai said, “I have been researching this for two years. About mining business, I studied and evaluated, and decided that now is the time. The reasons for that is we found ideal location for it, and we are finally able to develop the boards for it,” and assessed, “this being rather simple industry, if we have the ideal location for data center and the right chip, it is unlikely we lose.”
Regarding his decision to enter, Kumagai said in closing, “This is my hunch as an entrepreneur. When I came across the Internet, I was really excited. I feel the same excitement in virtual currencies industry. The Internet changed the world. So will virtual currencies. I feel a sense of deja vu. The way people involved in virtual currencies are heating up and how this space is expanding, it feels like the early days of the Internet. Powerful countries may think virtual currencies are nuisance, but there are many people who find them convenient. Even if headwinds will blow at times, it won’t be a problem at all.”