Data circulating on social media shows that despite Coinbase’s $800 million profit in the first quarter, the company would be even richer if it used its initial capital to buy BTC.
Coinbase loses profits to hodlers 2013
In view of the IPO on 14. April, Coinbase announced record profits this week. At $1.8 billion, the first quarter did better than the full year 2020.
The figures caused an immediate stir as market participants assessed the likely impact of the IPO. Other IPOs, including the recent sale of Deliveroo, have ended in liquidations.
But amidst the high valuations and accompanying noise, it seems that all Coinbase had to do to perform better was buy bitcoin.
Specifically, the initial capital of $30 million from the exchange in 2013 would have even grown to $2 billion if it had been converted to BTC at the time.
In contrast, Coinbase’s revenue to date is estimated to be between $780 million and $1.3 billion.
1 month candlestick chart BTC/USD (Bitstamp). Source: View of the shop
Coinbase is set to go public in less than 10 days and today released its exit numbers (~800M profit on 1.8B revenue), according to developer Vijay Boyapati.
Sounds great, but imagine how much they would have been worth if they had kept their profits in #Bitcoin for the past 8 years instead of dollars.
As reported by Cointelegraph, bitcoin’s compound annual growth rate has surpassed 200% and BTC/USD has risen more than 43,000% since April 2013.
Bitcoin supply shortage remains real
Boyapati addressed another, more controversial aspect of Coinbase’s business model, which will be in the spotlight this year. Despite all their success, leaders have always opted for a rather modest number of BTCs.
According to a recent filing with U.S. regulators, the exchange holds 4,486 BTCs. On the other hand, as Bojapati notes, newcomer MicroStrategy, though not an exchange, has bought more than 91,000 BTC since August last year, a share that has since doubled in dollar terms for the company.
It’s like Coinbase doesn’t even believe in an industry where they are one of the biggest players. Unfortunately, he added.
Not everyone was convinced. Eric Voorhees, founder of crypto-currency exchange service ShapeShift, stated that Coinbase’s contribution to the crypto-currency phenomenon sets it apart from MicroStrategy.
Imagine owning MicroStrategy in the highly regarded Coinbase. The latter has struggled for eight years to create the world’s most successful bitcoin company, serving 50 million people, he said in response to a tweet from Casa co-founder Jameson Lopp.
I first discovered bitcoin in 2020 and bought a bunch of… From Coinbase.Inflows of bitcoins at BTC/USD. Source: Ki Young Joo/Twitter
Meanwhile, Wednesday’s data showed a notable increase in exchange exits this week, suggesting that long-term trading and general interest in buying bitcoin is growing at a rapid pace.
Do we have a high market cycle? No, notes Qi Yang Zhu, CEO of on-chain analytics service CryptoQuant, which published the data, pointing to the difference between the current climate and the traditional peaks of the bitcoin cycle.
When the market peaks, everyone pours BTC into the exchanges to sell them.
Coinbase Pro, the professional arm of Coinbase, recorded 12,000 BTC outflow per transaction.
frequently asked questions
Is Coinbase the only way to buy bitcoins?
Coinbase is probably the fastest and easiest way to buy bitcoins in the US. If you need bitcoins quickly, buying with a debit card is a good option. There is a 3.99% fee when you buy a debit card on Coinbase, but you can get your coins immediately. Another payment option for customers in the United States is to use an affiliated bank account.
Can Coinbase steal my money?
Coinbase reports theft of customer funds, according to complaint documents filed with the SEC. – Coinbase users have filed 134 complaints with the Securities and Exchange Commission that their funds have been stolen from the exchange or blocked from their accounts.
How many bitcoins can I buy on Coinbase?
The coin base offers very high limits. The limits depend on your account level, which is determined by the amount of information you have verified. Fully verified US customers can buy up to $50,000 worth of bitcoins per day.
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