Coinbase loses $1.1B in Q2 after a fast crypto decline
The crypto company’s greatest quarterly net loss since its IPO on the Nasdaq Stock Exchange in April 2021.
Coinbase, the world’s largest cryptocurrency exchange, reported a shocking $1.1 billion financial loss in the second quarter of 2022 due to a rapid decline in the cryptocurrency markets. Coinbase also observed a dramatic decrease in trading volume and transaction income.
It is the second quarter of losses for the cryptocurrency corporation and the worst loss since its Nasdaq debut in April 2021.
The results, which fell short of analyst estimates, were disclosed in a Tuesday shareholder letter from Coinbase.
Despite the decline in transaction revenue, Morningstar stock analyst Michael Miller told Reuters in a report that “Coinbase did not see a mass exodus from its platform […] but its consumers are becoming less active in their bitcoin investments.”
The cryptocurrency exchange recorded revenue of $802.6 million, a 45.1% decrease from the previous quarter and a startling 153.1 percent decline from the prior-year quarter. Its $1.1 billion financial loss was mainly driven by $446 million in non-cash impairment charges triggered by lower crypto asset values in the second quarter.
Despite the economic downturn, Coinbase said that the firm is trying its best to adapt to altering market circumstances.
To reduce costs and increase profit margins, Coinbase reduced its workforce by 18 percent in June and implemented a “stop, maintain, and prioritise” product development strategy.
Prioritized products include the Coinbase Retail App, Coinbase Prime, Staking, Coinbase Cloud, and other Web3 apps.
Miller, however, cautioned that “it is doubtful that the cut can restore profitability at the present level of revenue creation.”