Skip to main content

Report: Coinbase made 43 percent of its 2017 revenue in December alone

Report: Coinbase made 43 percent of its 2017 revenue in December alone


The company’s $1 billion annual revenue may be difficult to repeat

Share this story

Illustration by Alex Castro / The Verge

The digital currency exchange and wallet service Coinbase, founded in 2012 and backed by Silicon Valley investors, recently told shareholders that it booked $1 billion in revenue in 2017. A new independent analysis says about 43 percent of that came in December when the price of bitcoin was surging, and the company’s revenue has plummeted since then.

“By no stretch of the imagination are they continuing that same trajectory,” says Jonathan Meiri, CEO of Superfly Insights, which analyzes data about consumer behavior. “There is a rise up in December. It’s not like it stayed on this plateau into January, February. It came crashing down.”

“By no stretch of the imagination are they continuing that same trajectory.”

Superfly Insights’ Coinbase analysis is based on anonymized and aggregated data from user email receipts from about 25,000 users through 2017 and the first six weeks of 2018, Meiri says. The data were collected through productivity apps, personal finance apps, and expense management apps. Superfly Insights typically provides this type of data and analysis to its clients, which include hedge funds, banks, and venture capital firms. It also provides data and analysis to KPMG, Meiri told me, and “three out of the top five ride hailing companies in the world.” The data collection is stated in the terms of use for each app or service involved, Meiri says, and the tracking is compliant with Europe’s strict new privacy law, the General Data Protection Regulation.  

The 43 percent figure lines up with what investors told Recode in January: Coinbase was expected to do about $600 million in revenue over the course of the year, but “bitcoin’s run between Thanksgiving and Christmas boosted the company’s 2017 revenue to over $1 billion.” The distribution also makes sense given the extreme price gains bitcoin saw in December.

Superfly Insights’ numbers are plausible, says Nicolas Christin, a professor at Carnegie Mellon who has experience tracking the digital currency economy through his revenue analysis for the infamous dark web market Silk Road. However, it would be difficult to verify them using the Bitcoin blockchain, the somewhat public transaction ledger, because services like Coinbase pool their transactions, he said. Coinbase declined to comment.

It isn’t surprising that Coinbase’s fortunes rise and fall with the price of the cryptocurrency market’s flagship coin. The New York Times called Coinbase “the heart of the Bitcoin frenzy.” Coinbase makes money from transaction fees, which vary depending on where users are based and which currencies they are using. In December, the price of a bitcoin surged from around $11,000 up to over $19,000 and then back down to around $13,000. That month, Coinbase experienced repeated outages, which it attributed to “high traffic.” According to the Times, the service was getting twice as much traffic as its previous peak and eight times what it was in June.

“There is no reason why we couldn’t see bitcoin pushing $50,000 by December.”

Higher prices and greater trade volume meant higher transaction fees for Coinbase and a gross revenue that will be hard to beat unless bitcoin prices surge again in 2018. “It’s going to be hard unless the trajectory picks up,” Meiri said. “It’s not going to be that easy to reach that same number.” Of course, many cryptocurrency pundits, several of whom are involved with companies in the space, say there will be another price surge this year. “There is no reason why we couldn’t see bitcoin pushing $50,000 by December,” Thomas Glucksmann, head of marketing at cryptocurrency exchange Gatecoin, told CNBC earlier this month.

Coinbase is popularly regarded as a darling of the cryptocurrency movement, the company that figured out the classic picks and shovels business to Bitcoin’s gold rush. For a long time, it was difficult for the general public to get their hands on cryptocurrencies: they either had to figure out how to mine the currency or find someone willing to sell, maybe through a website like LocalBitcoins. Coinbase was the first mainstream service to make it easy to buy and store bitcoin and other digital currencies using bank transfers and credit cards. Its CEO Brian Armstrong gave interviews to media and showed up at conferences, in contrast to the shadowy, pseudonymous entrepreneurs of the Bitcoin 1.0 era. That and Coinbase’s Silicon Valley pedigree gave it legitimacy. By the end of 2017 — and despite faulty customer service and a scuffle with the IRS — Coinbase was riding high. A New York Times profile reported that the company was adding two new floors to its San Francisco office.

Coinbase’s competitors were nipping at its heels, however, and now there are multiple options for buying digital currencies. In 2018, Square and the stock trading app Robinhood introduced support for digital currencies. Both companies said they are not charging fees for digital currency transactions, which puts pressure on Coinbase.

“I’m curious how Coinbase intends to build a recurring business considering the low revenue per user per month.”

Superfly Insights also found that the breakdown of Coinbase transactions changed dramatically over the year. At the beginning of 2017, Superfly Insights found that bitcoin purchases made up about 90 percent of Coinbase transactions and the average purchase was $483. A year later, bitcoin purchases make up less than half of all transactions on Coinbase, which also supports Ether, Litecoin, and, as of December 2017, Bitcoin Cash. Superfly Insights also found that users rarely sell their bitcoins, but when they do, the average sell order is almost three times higher than the average purchase: $1,393.

“I’m curious how Coinbase intends to build a recurring business considering the low revenue per user per month,” Meiri wrote in his analysis. “In layman’s terms, people come to Coinbase to buy Bitcoin, they continue to do so until they accumulate a certain amount and that’s about it. Considering how many times a day I check Coinbase, it is quite shocking how few fee-baring things I do inside.”

The Superfly Insights analysis shows how Coinbase’s revenue reflects the volatility and lopsidedness of the still-nascent digital currency world. The company may be able to boost its revenue through its new merchant platform, Coinbase Commerce, which enables vendors to accept digital currency payments — and if more merchants are using digital currencies, the trading price of those currencies may go up as well. That will depend on whether Coinbase can convince businesses to jump into the digital currency world. “They need to reach out to merchants, make the business case,” Meiri said in an email. “Most merchants are not that interested in the (relatively small) number of BTC or ETH holders.”

Coinbase has raised more than $225 million from investors. Its most recent funding round valued the company at $1.6 billion, in part due to its explosive growth.

Today’s Storystream

Feed refreshed 55 minutes ago The tablet didn’t call that play by itself

The Verge
Mary Beth Griggs55 minutes ago
We’re about an hour away from a space crash.

At 7:14PM ET, a NASA spacecraft is going to smash into an asteroid! Coverage of the collision — called the Double Asteroid Redirection Test — is now live.

Emma RothTwo hours ago
There’s a surprise in the sky tonight.

Jupiter will be about 367 million miles away from Earth this evening. While that may seem like a long way, it’s the closest it’s been to our home planet since 1963.

During this time, Jupiter will be visible to the naked eye (but binoculars can help). You can check where and when you can get a glimpse of the gas giant from this website.

Asian America learns how to hit back

The desperate, confused, righteous campaign to stop Asian hate

Esther Wang12:00 PM UTC
Emma Roth7:16 PM UTC
Missing classic Mario?

One fan, who goes by the name Metroid Mike 64 on Twitter, just built a full-on 2D Mario game inside Super Mario Maker 2 complete with 40 levels and eight worlds.

Looking at the gameplay shared on Twitter is enough to make me want to break out my SNES, or at least buy Super Mario Maker 2 so I can play this epic retro revamp.

External Link
Russell Brandom7:13 PM UTC
The US might still force TikTok into a data security deal with Oracle.

The New York Times says the White House is still working on TikTok’s Trump-era data security deal, which has been in a weird limbo for nearly two years now. The terms are basically the same: Oracle plays babysitter but the app doesn’t get banned. Maybe it will happen now, though?

Richard Lawler6:54 PM UTC
Don’t miss this dive into Guillermo del Toro’s stop-motion Pinocchio flick.

Andrew Webster and Charles Pulliam-Moore covered Netflix’s Tudum reveals (yes, it’s going to keep using that brand name) over the weekend as the streamer showed off things that haven’t been canceled yet.

Beyond The Way of the Househusband season two news and timing information about two The Witcher projects, you should make time for this incredible behind-the-scenes video showing the process of making Pinocchio.

External Link
Russell Brandom4:29 PM UTC
Edward Snowden has been granted Russian citizenship.

The NSA whistleblower has been living in Russia for the 9 years — first as a refugee, then on a series of temporary residency permits. He applied for Russian citizenship in November 2020, but has said he won’t renounce his status as a U.S. citizen.

External Link
Emma Roth4:13 PM UTC
Netflix’s gaming bet gets even bigger.

Even though fewer than one percent of Netflix subscribers have tried its mobile games, Netflix just opened up another studio in Finland after acquiring the Helsinki-based Next Games earlier this year.

The former vice president of Zynga Games, Marko Lastikka, will serve as the studio director. His track record includes working on SimCity BuildIt for EA and FarmVille 3.

External Link
Andrew J. Hawkins3:37 PM UTC
Vietnam’s EV aspirant is giving big Potemkin village vibes

Idle equipment, absent workers, deserted villages, an empty swimming pool. VinFast is Vietnam’s answer to Tesla, with the goal of making 1 million EVs in the next 5-6 years to sell to customers US, Canada and Europe. With these lofty goals, the company invited a bunch of social media influencers, as well as some auto journalists, on a “a four-day, multicity extravaganza” that seemed more weird than convincing, according to Bloomberg.

James Vincent3:17 PM UTC
Today, 39 years ago, the world didn’t end.

And it’s thanks to one man: Stanislav Petrov, a USSR military officer who, on September 26th, 1983, took the decision not to launch a retaliatory nuclear attack against the US. Petrov correctly guessed that satellite readings showing inbound nukes were faulty, and so likely saved the world from nuclear war. As journalist Tom Chivers put it on Twitter, “Happy Stanislav Petrov Day to those who celebrate!” Read more about Petrov’s life here.

Soviet Colonel who prevented 1983 nuclear response
Photo by Scott Peterson/Getty Images
The Verge
James Vincent3:03 PM UTC
Deepfakes were made for Disney.

You might have seen the news this weekend that the voice of James Earl Jones is being cloned using AI so his performance as Darth Vader in Star Wars can live on forever.

Reading the story, it struck me how perfect deepfakes are for Disney — a company that profits from original characters, fans' nostalgia, and an uncanny ability to twist copyright law to its liking. And now, with deepfakes, Disney’s most iconic performances will live on forever, ensuring the magic never dies.

External Link
Elizabeth Lopatto2:41 PM UTC
Hurricane Fiona ratcheted up tensions about crypto bros in Puerto Rico.

“An official emergency has been declared, which means in the tax program, your physical presence time is suspended,” a crypto investor posted on TikTok. “So I am headed out of the island.” Perhaps predictably, locals are furious.

The Verge
Richard Lawler2:09 PM UTC
Teen hacking suspect linked to GTA 6 leak and Uber security breach charged in London.

City of London police tweeted Saturday that the teenager arrested on suspicion of hacking has been charged with “two counts of breach of bail conditions and two counts of computer misuse.”

They haven’t confirmed any connection with the GTA 6 leak or Uber hack, but the details line up with those incidents, as well as a suspect arrested this spring for the Lapsus$ breaches.