Coinbase, the leading cryptocurrency exchange in the United States, recently reported its earnings for the first quarter of 2024. The company’s total revenue for the quarter stood at a remarkable $1.6 billion, representing a substantial 72% increase compared to the previous quarter. Moreover, Coinbase’s net income reached an impressive $1.18 billion, equivalent to $4.40 per share. This robust financial performance was largely driven by the surge in cryptocurrency prices and the introduction of spot Bitcoin ETFs in the U.S., which attracted additional capital into the market.
In Q1, Coinbase recorded an adjusted EBITDA of $1 billion, up from $977.5 million in the previous year. The company also noted that a significant portion of its net income was derived from $737 million in pre-tax unrealized gains on cryptocurrency assets. By the end of the quarter, Coinbase reported having $7.1 billion in capital, which included $1.1 billion in net cash generated from the issuance of 2030 convertible notes.
Coinbase witnessed substantial growth across its various business segments in the first quarter of 2024. Consumer transaction revenue doubled to $935.2 million, with transaction volume surging by 93% to reach $56 billion. Institutional interest also saw a significant uptick, with transaction revenue increasing by 133% to $85 million. The Coinbase Prime trading volume surged by 105% to $256 billion, surpassing the U.S. spot market. Notably, Bitcoin transactions accounted for a third of both consumer and institutional activities during the quarter.
Coinbase’s custodial services revenue experienced a 64% increase, amounting to $32 million in the first quarter. This growth was primarily fueled by the launch of spot Bitcoin ETFs earlier in the year, as Coinbase serves as the custodian for eight of the eleven recently introduced products. The assets under custody for Coinbase reached $171 billion by the end of the quarter, reflecting the company’s strong position in the market.
During the quarter, Coinbase made strategic investments and expansions to strengthen its position in the market. The company acquired a minority stake in Circle, the issuer of USDC stablecoin, contributing to a 30% increase in market capitalization. Additionally, Coinbase’s Ethereum layer 2 chain, Base, generated $56.1 million in revenue since its launch in August. Base outperformed Ethereum in transaction volume and experienced an 800% surge in developer activity during the quarter.
Despite the introduction of Base and USDC, Coinbase’s exceptional financial performance in Q1 2024 was predominantly driven by favorable market conditions. The price of Bitcoin soared by 57% to reach an all-time high of $73,000, bolstered by significant capital inflows into ten spot Bitcoin ETFs approved in January. However, the company noted a 73% increase in transaction expenses, amounting to $217 million. Coinbase anticipates even higher expenses in Q2 due to the surge in trading volume, with projected costs reaching as high as $890 million.