Coinbase Reports Significant Profit Decline in Q1, Increases Bitcoin Purchases, Recognizing Nearly $600 Million in Unrealized Losses
Coinbase Reports Q1 Financial Results
US cryptocurrency exchange Coinbase announced its Q1 financial results, revealing growth in revenue but a decline in profit due to severe price fluctuations in the digital asset market. In Q1, Coinbase added $153 million in cryptocurrency assets as a long-term investment, primarily in BTC, demonstrating confidence in the long-term value of Bitcoin. However, it also recognized an unrealized loss of $597 million.
Coinbase Q1 Revenue Grows but Profit Declines, Affected by Crypto Asset Valuation
Q1 revenue grew approximately 24% year-on-year, reaching $2 billion, but net income fell 94% to $65.61 million, or $0.24 per share. Due to the downturn in the crypto market in Q1, overall trading revenue decreased from the previous quarter but was still up 17% compared to the same period last year.
Coinbase experienced operational costs impacted by the price volatility of its held crypto assets, particularly due to price changes during the receipt and sale of staking rewards. This quarter, it recognized $34.4 million in expenses related to the price fluctuations of operationally held crypto assets.
Since Coinbase values its crypto holdings at market prices, it significantly increased its Bitcoin holdings for investment purposes this quarter while also recognizing an unrealized loss of $597 million.
USDC Issuance Continues to Rise, Coinbase Earns Nearly $300 Million in Q1
The stablecoin USDC issued by Circle has surged from $33 billion a year ago to $60.8 billion, driven by the recovery of the crypto market, institutional demand, on-chain adoption, and active trading on the Coinbase International Exchange.
In February, Coinbase launched the USDC Boosted Rewards program, allowing users to earn up to 12% APY on USDC held in perpetual contract portfolios, with a cap of $1 million.
USDC serves as a key foundation for the on-chain economy:
- Retail Lending: Users can borrow using USDC
- Global Remittance: Provides a faster and more efficient cross-border payment method
As a primary distribution engine, Coinbase continues to drive the application of USDC in the financial sector. In 2024, the reserve promotion fees from Circle to Coinbase are projected to be $908 million, with Q1 of this year also showing continued growth at $298 million.
Coinbase Increases Bitcoin Holdings, Holding 9,267 Coins as Long-Term Investment
Coinbase holds various crypto assets, including Bitcoin, Ethereum, and SOL, for long-term investment, operational purposes, and as collateral for borrowed assets.
In Q1, Coinbase added $153 million in crypto assets as long-term investments, primarily in BTC, reflecting its confidence in Bitcoin’s long-term value.
As of March 31, the long-term holdings included:
- Bitcoin: 9,267 coins (6,885 coins at the end of December)
- Ethereum: 137,334 coins (115,700 coins at the end of December)
- Investment-held crypto assets: $1.3 billion
- Crypto assets held as collateral: $598 million
- Total liquid resources including the above assets: $11.8 billion
Coinbase Announces Acquisition of Deribit, Analysts Optimistic
Earlier, Coinbase announced its acquisition of the crypto derivatives exchange Deribit for $2.9 billion. Industry analysts welcomed the news, as the accelerating demand for digital asset products will enable this US exchange to immediately engage in derivatives trading globally and provide institutional-grade infrastructure. Derivatives trading accounts for a significantly higher proportion of total crypto trading volume compared to the spot market, and it is more profitable, which will help Coinbase dominate the market in the US.
(Crypto Options Giant! Coinbase Announces Acquisition of Deribit, Creating the Most Comprehensive Crypto Derivatives Trading Platform Globally)
Risk Warning
Investing in cryptocurrencies involves high risks, with prices potentially experiencing extreme fluctuations. You may lose your entire principal. Please assess the risks carefully.
