From the third quarter of 2021, Coinbase’s total revenue has dropped from USD 2.0 billion to USD 800 million, according to their most recent financial report. This is approximately a 60 percent drop.
Coinbase, one of the largest cryptocurrency exchanges all across the world, reported its massive loss in Q2 2022. They have faced an approximate loss of 1.1 billion making its current revenue nearly 800 million USD. Compared with other Quarters, the revenue had dropped by 31 percent from Q1.
Coinbase, The Largest Cryptocurrency Exchange In The US, Has Reported A $1.1 Billion Loss
Further, Coinbase had said, “ Q2 was quite tough for all the major crypto companies. The transaction revenue and the trading volume went down by 35 and 30%, respectively. Such metrics were influenced by the market activity and customer activity on the exchange”).
Also, compared to the first few months of this year, the total number of trades has dropped by 30 percent. It has approximately reached USD 217 Billion.
The company believes that due to the loss of macroeconomic conditions, there is a crypto downturn. Recently the Federal Reserve has talked about increasing the interest rates due to speculative assets and inflation. This had an adverse impact on numerous tech enterprises. Crypto is one of the most known speculative assets, whose value has dropped recently.
Also, Chief Financial Officer (Alesia Hass) said that long-term debt was taken when interest rates were lower. Coinbase has USD 6.2 Billion available in the treasure that would help them to invest during the crypto downturn. Also, she mentioned that coinbase would maintain a year’s loss on earnings before amortization, depreciation, and taxes worth no more than USD 500 Million.
Meanwhile, the company has faced many questions from the financial analyst about the losses worth more than USD 1.52 Billion in the first half of the year. Coinbase has Stock-based Rewards for all the employees that are almost equal to 40 percent of total revenue in Q1. However, the company has understood the significant concerns about the stock-based pay and would work on restrategizing it.
Before the collapse of Terra Luna, a Cryptocurrency with more than a USD 15 Billion market cap had caused a ripple effect that led various other crypto firms to declare bankruptcy.
Coinbase had further shared a letter to all the shareholders. The note was optimistic about the future and contained information about the Crypto downturn. An excerpt from the letter is as follows.
“ The current crypto downturn is quite furious and fast. We are looking to understand customer behavior in recent times. During the crypto bear market, we have focused on building some unique products in the Crypto Ecosystem. Every Crypto Cycle had landed quite higher than the earlier ones due to major innovations done in the bear market.”