While it’s true that since their peak in late 2017, cryptocurrencies have generally declined 70% in value, the mega-exchange Coinbase had its most profitable year to date. In 2018, Coinbase’s worth as a company skyrocketed.
On Tuesday, Coinbase COO Asiff Hirji sat down with Bloomberg, and stated the exchange expects $1.3 billion in revenue for 2018
On the same day, the exchange announced they’d just been valued at $8 billion.
For a six-year-old company, these figures are pretty impressive. And the $8 billion valuation means that Coinbase is worth five times more than it was just last year.
Considering everything Coinbase has been up to this year, these figures come as no surprise
The company is expanding in several directions. Just a few weeks ago, they added their 5th coin, 0x (ZRX), and have several others under review. They’ve are also certified as a Qualified Custodian in New York. This could account for a decent portion of their valuation. In fact, Tribe Capital issued a report that reveals that Coinbase’s user base dropped with 80% since the end of last year. But their earning power rose significantly over the last two years.
Bloomberg reported that in 2016, exchange’s revenue was only $17 million, against a reported $16 million in losses that same year. In 2017, however, their profit was $380 million, and they predict $456 million for this year. The custody and other brokerage services proved to be an advantage, and a factor that sets the already giant exchange apart from its competitors.
There’s no doubt that the company received significant financial backing from prominent firms. Following the $8 billion valuation, Tiger Global gave the exchange $300 million towards their expansion projects.
But Hirji also says that Coinbase is being selective about its investors:
“Coinbase is, and will remain, a crypto-first company…For this round, we simply weren’t interested in taking investments from firms that didn’t have a constructive view of crypto,” Hirji said. “This round, and the future of crypto in general, needs to be about more than asset prices.”
Clearly, they can afford to be selective, since there’s no shortage of interested investors. As Hirji remarked, “This was an opportunistic round. We didn’t have to go out and raise capital.”
Hirji ended the interview by simply reminding us that even Coinbase’s massive success hinges on the positive performance of crypto itself. It’s a risk for both the exchange and the investors. But they seem to have a lot of faith in the technology.
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