Brian Armstrong, co-founder and CEO of Coinbase Inc.
David Paul Morris | Bloomberg | Getty Images
Coinbase doesn’t just offer a chance to trade a bunch of bitcoin – it keeps cryptocurrencies on its books.
In the company’s forecast for public market investors recorded Thursday, Coinbase revealed $ 316.1 million worth of crypto assets on its balance sheet as of December 31, up nine times from $ 33.9 million at the end of 2019.
The value of Bitcoin rose more than 300% last year, and the digital currency ethereum jumped nearly 500%, both of which have extended their rally to start in 2021. While Coinbase does most of its money by allowing investors to trade, store and borrow. crypto funds, the company is also placing its own bet on the way for the major digital currencies.
“Since its inception in 2012, Coinbase has kept bitcoin and other crypto assets on our balance – and we plan to invest in crypto funds as we strongly believe in long-term potential. time of cryptoeconomy, “Brett Tejpaul, Coinbase ‘s head of institutional coverage, wrote in a blog post Wednesday. “Investing in crypto assets required us to develop new investment, accounting and taxation policies, as well as ensuring that we established a control environment for the purposes of unauthorized audit opinion on our financial statements. “
The announcements at Coinbase, before the upcoming listing on the Nasdaq, gave the company an in – depth first look. Revenue more than doubled last year to $ 1.1 billion, and the company generated a profit of $ 322 million after losing more than $ 30 million the previous year. Coinbase is expected to be one of the rarest high-tech companies with revenues higher than operating costs at the time of its first public market.
Axios announced last week that Coinbase was recently awarded more than $ 100 billion in a private market fair, designed to help set a price for public investors. In direct listing, companies allow existing investors to sell shares on the open market rather than selling new shares at a discount.
Coinbase’s crypto assets account for about 30% of the company’s cash and equivalent amount on its balance sheet, up from just 6.2% at the end of 2019. Coinbase reported as at 31 December, bitcoin and ethereum accounted for 63% and 8% of total crypto assets held, respectively, without its loans. Trading in bitcoin and ethereum accounted for 56% of user size, Coinbase said.
Coinbase classifies its crypto holdings as intangible assets, meaning they are not physical items. The value of assets on Coinbase books may change based on their fair market value. The company says it will conduct “annual discount tests” on October 1.
“A decline in price could require us to reduce the cost of our crypto assets and a decline in the value of the crypto assets we hold in higher densities could have a greater impact on operating results at any given time, “Coinbase said in a brochure.
Even as the numbers dwindle, they still can’t keep up with market momentum. Since the beginning of 2021, bitcoin is up another 70% and ethereum has more doubled. That means if Coinbase updated its balance sheet based on conventional trading, its holdings would likely be worth hundreds of millions of dollars more than they were two months ago.
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