Turnover, profit at Coinbase’s Irish arm climbed before ‘crypto winter’ onset

After-tax profits at the Irish arm of crypto asset exchange Coinbase jumped more than 300 per cent to €2.7 million in 2021 before the crypto downturn set in earlier this year, sending the company’s share price tumbling more than 80 per cent so far. However, the company’s directors warned that the figures may not accurately “indicate future performance” because of the “highly volatile nature” of crypto assets.

New accounts for Coinbase Ireland show the company generated turnover of €64.5 million last year, an increase of 550 per cent from 2020, in line with a broader peak in the overall crypto market, which was valued at $2.5 trillion (€2.4 trillion) in May 2021.

But the overall market’s value has slumped to as low as $763 billion this year, industry news site CoinDesk estimated recently, with the value of bitcoin having plunged more than 62 per cent in the past 11 months alone. A number of high-profile firms, including most recently Sam Bankman-Fried’s FTX exchange, have collapsed in the downturn, known in the industry as a ‘crypto winter’.

Founded in the US in 2012, Coinbase allows users to buy and sell crypto assets such as bitcoin and ethereum. It received an e-money licence from the Central Bank of Ireland in 2019, entitling it to provide electronic payment services and handle electronic payments for third parties.

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In a report attached to the accounts, the directors of Coinbase Ireland said the company was profitable in 2021 due to revenue generated through providing support services and e-money integration to affiliate entities.

They said that although the Irish entity “does not hold crypto assets directly”, its “operating results are dependent on crypto assets and the broader cryptoeconomy”. As such, the directors said that “due to the highly volatile nature” of the sector, Coinbase’s “operating results will continue to fluctuate significantly” and it is difficult for the company to forecast growth trends accurately”.

“In view of the rapidly evolving nature of the business and the cryptoeconomy, period-to-period comparisons of our operating results may not be meaningful, and you should not rely upon them as an indication of future performance,” the directors stated.

Coinbase employed an average of 117 people at its offices in Dublin in 2021, up from 58 in 2020.

However, its parent company announced in June that it would be laying off 18 per cent of its workforce in response to the steep decline in crypto prices and trading volumes.

In a note attached to the accounts, the company said: “The first half of 2022 continued a trend of both lower crypto asset prices and volatility that began in late 2021. This trend could have an impact on the company’s 2022 results of operations but is not expected to have a material impact on the company’s business operations or operating margin.”