Coinbase hit the billion-dollar milestone for revenue collections in 2017, according to people familiar with its financial results. The popular crypto exchange remains on a profitability streak as the business builds on the speculative frenzy driving up the value of cryptocurrency turnover.
In the year that ended in December 2017, Coinbase pulled in about $1 billion, up from $600 million it expected for the same period last September, Recode has learned from industry sources.
Although Coinbase would not reveal its exact revenue figures, it said that its monthly revenues have grown several times in the past year. The numbers have been buoyed by explosive interest following Bitcoin’s sharp appreciation in the second half of 2017, as well as the overall cryptocurrency market standing out as an exceptionally active outlet for restless traders.
The revenue figure was also fueled by the increasing number of Coinbase’s accounts, which have gone from nearly 4 million in 2016 to more than 14 million at the end of 2017. In the last three months, Coinbase was sometimes getting 100,000 new customers a day — leaving the company with more customers than big brokerage firms in the mainstream financial industry.
The uptick can also be attributed to the company’s international expansion into markets like Australia, increased transaction limits on Coinbase’s brokerage, as well as growing interest in alternative cryptocurrencies like Bitcoin Cash.
Earlier last year, Coinbase CEO raised concerns about the exchange’s profitability, saying “most companies in the digital currency space are not profitable right now. Coinbase is not, and I would venture to guess that there are few others out there who are.”
However, given the higher-than-expected adoption rates for Bitcoin, combined with technological advancements that have helped the fundamental technology process a greater number of transactions, Coinbase has been subtly reinventing itself over the past two years or so.
First launched as a wallet for people to stash their Bitcoin online, Coinbase has been evolving into a broker that people can use to buy and sell digital money. In addition to the brokerage service for small investors, Coinbase also runs an exchange, called GDAX, tailored to larger investors.
The decision to expand beyond one cryptocurrency led Coinbase last year to add the option for customers to trade more than just Bitcoin, Litecoin and Ether, the three virtual currencies that Coinbase buys, sells and holds for customers. In December, the company added to GDAX another popular cryptocurrency, Bitcoin cash, which emerged earlier in August as a split off from the Bitcoin blockchain.
Founded six years ago by a former Goldman Sachs trader and an Airbnb engineer, Coinbase is one of the most well-funded cryptocurrency ventures. It has recently raised $100 million in Series D funding at private valuation approaching $1.6 billion, making it the first startup in the world of crypto assets to become a unicorn, or company with a valuation greater than $1 billion.