Coinbase Profits Rise During Wild Bitcoin Rally and Selloff

Coinbase Profits Rise During Wild Bitcoin Rally and Selloff

Coinbase Global Inc.’s fourth-quarter revenue more than quadrupled as the largest U.S. cryptocurrency exchange benefited from a manic quarter that saw bitcoin set a record high before falling sharply.

For the fourth quarter, Coinbase COIN -7.46%

net profit of $840 million, or $3.32 per diluted share, on net income of $2.5 billion, the company said Thursday, compared with profit of $177 million on net income of $497 million a year earlier.

Analysts had expected earnings of $1.94 per share on revenue of $1.97 billion, according to FactSet.

Although the SEC has not announced any major actions against major crypto exchanges, the commission has threatened to sue companies offering crypto loans. The WSJ’s Dion Rabouin explains why this part of the crypto market has received such a strong reaction. Photo: Mark Lennihan/Associated Press

In after-hours trading, Coinbase shares fell 3.7% to $172.86.

For 2021, the company reported net income of $3.62 billion on net revenue of $7.36 billion, compared to net income of $322 million on net revenue of 1 .14 ​​billion in 2020.

The fourth quarter was particularly volatile for cryptocurrencies. The price of bitcoin surged from $43,800 to a record high of $68,991 in November, a gain of 58%, pushing the value of the entire crypto market to a record $3 trillion. From there, however, bitcoin fell 33%, ending the quarter at $46,208.

This price action attracted a lot of attention and brought in many new users, which helped Coinbase. Like any exchange, it makes money on trades, not on the direction of trades.

Despite this volatility – or for some high-risk traders because of it – the crypto market has seen renewed interest and trading, and Coinbase’s report attests to this. A key measure of its customer base, users transacting monthly, rose to 11.4 million in the fourth quarter from 2.8 million a year earlier.

Overall, the exchange has 89 million verified users. Analysts had forecast 78 million users.

Its trading volume for the quarter rose to $547 billion from $89 billion a year ago, and assets on the platform — how much money customers keep in Coinbase accounts — rose to 278. billion dollars against 90 billion dollars.

Coinbase is the largest of a group of publicly traded companies, including Marathon Digital Holdings Inc.,

Riot Blockchain Inc.

and MicroStrategy Inc.,

who are either in or focused on the crypto industry. For this reason, their actions tend to follow the price of the broader crypto market.

Shares of Coinbase closed at a record high of $357.39 on Nov. 9, around the same time bitcoin hit its all-time high. It’s been mostly downhill since then. After closing Thursday at $179.56, the stock is down 50% from that record and 29% since the start of the year.

Write to Paul Vigna at [email protected]

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Appeared in the February 25, 2022 print edition as “Coinbase Profit Surges During Bitcoin Ride”.