Coinbase cryptocurrency exchange net loss exceeds $2.6 billion in 2022
Net loss of the largest U.S. crypto exchange Coinbase exceeded $2.6 billion in 2022
The income of the largest U.S. cryptocurrency exchange decreased by more than four times last year
According to the report of financial results for the fourth quarter of last year published on February 21, the largest U.S. crypto-exchange Coinbase recorded a net loss of $557 million, and for the entire year - $2.625 billion. For comparison, in 2021 Coinbase net income was respectively $840 million and $3.624 billion.
A net loss is recorded when total expenses (including taxes, fees, interest on loans, and amortization) exceed income for a given time period.
According to the report, Coinbase's revenue more than quadrupled last year. Thus, in the last three months, the crypto-exchange earned $605 million, compared to $2.49 billion in the same period in 2021.
The annual revenue of the crypto exchange decreased by 57%. For all of last year, Coinbase earned $3.1 billion, which is more than half of the $7.3 billion it earned a year earlier.
Coinbase said in a statement that last year was difficult for cryptocurrencies, on the one hand, because of macroeconomic factors such as high inflation and rising interest rates, and on the other because of two "unique" events in the industry itself. The first is the collapse of the LUNA token, which contributed to the cryptocurrency market capitalization decline of about 60% and exposed poor cryptocurrency risk management practices that eventually led to the bankruptcy of Three Arrows Capital, Voyager, and Celsius. The second event was the collapse of FTX, which was the result of fraud and caused a number of other bankruptcies in the industry.
At the same time, Coinbase notes that the situation in the crypto market has improved in the current first quarter compared to the expired fourth quarter. But Coinbase warned investors not to extrapolate these results into the future, as last year showed how quickly the market can change.
Early last December, Coinbase CEO Brian Armstrong said that the company's revenue in 2022 will be cut in half or more because the decline in cryptocurrency prices and the collapse of FTX undermined investor confidence. He estimated that the exchange's revenues would have fallen to about $3.2 billion.
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