Galaxy Digital’s Q2 Net Loss Tripled To $554.7 Million Amid Market Turmoil

Galaxy Digital Holdings Ltd, major US-based financial services and investment management firm that provides institutions and clients with a full suite of digital assets and financial solutions, on Monday announced its second-quarter earnings report that showed that the company has more than tripled the amount of the net loss it witnessed in the same period last year.

The digital asset manager said the expanded loss during the period was triggered by the current market downturn as well as investments in its trading business, which collectively drove unrealized losses higher during the period.

Galaxy stated that its net loss stood at $554.7 million in the second quarter, compared to a loss of $182.9 million during the same period last year.

The company said that its cash at hand stood at $1 billion while its net digital asset positions stood at $474.3 million in the second quarter.

On Dec. 31, 2021, Galaxy Digital said it had $811.1 million in cash and $1.21 billion in net digital asset positions.

The firm said its preliminary assets under management were almost $1.7 billion at the end of the second quarter, compared with $1.6 billion a year ago. However, assets under management declined 40% from the first quarter.

Galaxy mentioned that its mining business made a revenue worth $10.9 million in the second quarter, and its comprehensive net income tripled from a year ago.

The company said investments it made in its trading business stood at $753.9 million at the end of June, a decrease of about 25% from March 31, majorly due to the decline in the valuations of certain investments.

The Crypto Market Plunge as Hard Lesson for Asset Managers

The crypto market experienced a full meltdown in May and June, losing $1 trillion in value within a few weeks.

The sudden and rapid collapse of popular cryptocurrencies and crypto-related firms (such as Three Arrows Capital, and Celsius Networks, among others) revealed the unstable nature of the crypto industry.

Among companies that experienced massive losses worth millions of dollars were Galaxy digital, Coinbase, and others.

This year, Coinbase has seen its stock price plunge 81% and has recently announced plans to cut 1,100 employees as it grappled with a slowdown in trading that has compelled it to abandon its growth plans. In the first quarter, Coinbase reported a loss of $430 million.

Most crypto asset managers are now struggling because fewer users on the platforms are making transactions.

Early this year, prices of bitcoin, Ethereum and other major coins began dropping as soaring inflation tightened its grip on the U.S. economy.

But all is not lost for crypto asset managers as more bounces are expected in the market. Despite recent struggles, these firms will make it through the ongoing crypto market clampdown and eventually thrive. That is because these firms have learned how to survive such downturns.

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Coinbase Nets $771 Million Profit in Q1 2021

Key Takeaways

  • Coinbase tripled its earnings from the previous quarter in Q1 2021, netting a profit of $771 million.
  • Coinbase CEO Brian Armstrong says that the exchange will list Dogecoin soon.
  • The exchange went public on NASDAQ last month, briefly hitting a valuation of $100 billion.

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Coinbase has its strongest quarter yet as the crypto market skyrockets. 

Coinbase Rides Crypto Boom

Coinbase netted $771 million profit in Q1 2021, the company has revealed. 

The exchange hosted the first earnings call since its NASDAQ listing last night, confirming that it had tripled its revenue from the last quarter. The company’s total revenue was $1.8 billion, while earnings hit $3.05 per share. 

The figures closely matched those Coinbase had projected around the time of its direct listing. The total volume on the exchange was $335 billion, up from $89 billion in the previous quarter. Of that $335 billion, $215 billion came from institutional buyers, strengthening the view that the crypto space is attracting more than retail noise. Monthly transacting users also jumped from 2.8 million to 6.1 million. 

Interestingly, the company’s CEO Brian Armstrong noted that the exchange plans to list Dogecoin in the next six to eight weeks. He said: 

“We’re putting a lot of work and thought into how to accelerate our asset onboarding, including DOGE.” 

Dogecoin has outperformed the rest of the market this year, helped by Elon Musk and widespread media coverage. In recent weeks, the meme currency has been replicated in various “dog coin” clones. Vitalik Buterin sent a hefty stack of the replica coins he’d received to various charities earlier this week; one donation he sent to a COVID-19 Relief Fund in India had a paper value of around $1.1 billion. 

The company also pointed out that its business is “inherently unpredictable.” Coinbase’s recent success is owed to a surge in demand for assets like Bitcoin and Ethereum; about 94% of its earnings came from transaction fees last quarter. 

Coinbase went public on NASDAQ in April, in what was described as a watershed moment for the cryptocurrency industry. It opened at $381 per share and briefly hit a valuation of $100 billion. Shares have fallen since then: they were priced at $265 at yesterday’s market close. 

Disclosure: At the time of writing, the author of this feature owned ETH and several other cryptocurrencies. 

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Square Reaches $3.5 Billion in Bitcoin Revenue in First Quarter of 2021

Square Inc. has announced a $3.51 billion in Bitcoin revenue during the first quarter of 2021, which is an increase of more than 11 times over the same period last year.  The digital payment firm released its earnings report for the first quarter of 2021 yesterday.

“Cash App generated $3.51 billion of Bitcoin revenue and $75 million of bitcoin gross profit during the first quarter of 2021, each up approximately 11x year over year,” Square’s shareholder letter revealed yesterday.

The company’s Bitcoin revenue for the three months ending March 31 this year was $3.51 billion compared to $306 million generated during the same period last year, representing an increase of 11x. This marked a significant improvement from Q1 performance when the firm reported that Cash app’s Bitcoin revenue increased 1002%.

The revenue doubled the company’s Bitcoin’s revenue of $1.76 billion in the fourth quarter of 2020.

The total revenue of the company in the first quarter of this year was $5.06 billion, and this means that Bitcoin revenue accounted for 70% of Square’s total consolidated revenue in the quarter.

“In the fourth quarter of 2020 and first quarter of 2021, we invested $50 million and $170 million, respectively, in Bitcoin,” Square disclosed saying that it expects to hold such investments for the long-term. 

Bitcoin Going Mainstream

Among publicly traded companies, Square has led the way in developing Bitcoin services, first launching its Bitcoin purchases in its Cash App, a mobile payment service, in 2018 to enable users to sell and buy the crypto asset.

The mobile payment processor company generates revenues by selling Bitcoin on its Cash App. In 2020, Square stated that over three million customers bought or sold Bitcoin on its Cash App, and in January 2021, over one million customers bought Bitcoin through the app for the first time.

Other companies that have also moved into the cryptocurrency recently include Tesla, which announced that it purchased $1.5 billion worth of Bitcoin as part of its treasury reserve and accepted the cryptocurrency as a payment method for customers buying motor vehicle products and services.

Bank of New York Mellon, the oldest bank in the United States, recently stated that it plans to start offering Bitcoin services later this year. PayPal recently expanded its cryptocurrency trading services on its Venmo payments app to enable customers of the payment app to sell, buy, and trade as little as $1 worth of crypto on the app.

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Coinbase Reports $1.8 Billion Total Revenue for Q1 2021 and Outperforms Its 2020 Figures

Coinbase cryptocurrency exchange has released its earnings report ahead of its direct listing next week and the estimates showed a massive growth rate.

According to the report, revenue for the quarter ended on March 31, 2021, and came in at $1.8 billion. Revenue is up from $190.6 million in the same period last year.

The Coinbase Report Highlights

The burgeoning growth of the entire cryptocurrency industry as defined by the 700% growth in Bitcoin’s price over the past year and more than 1,100% in the price of Ethereum, is helping bring Coinbase’s performance to a new level. For the first quarter of 2021, the company noted it now has a total of 56 million verified users contributing to a net income growth ranging between $730 million and $800 million from $31.9 million a year ago.

Though these estimates according to the company are unaudited, it reported a quarterly trading volume of $335 billion. Other important highlights for the quarter include a Monthly Transacting Users (MTUs) of 6.1 million and a total of $223 billion of assets sitting on the platform, representing a total of 11.3% crypto asset market share. Institutional investors hold a total of $122 billion on the platform.

Through the earnings report, the trading platform gave a financial outlook for the rest of the year noting its earnings and revenue are directly proportional to its Monthly Transacting Users (MTUs). Based on this, it gave three possible scenarios including high (Average MTUs for the year top 7 million), Medium (MTU count gets pegged at 5.5 million), and Low (MTU falls to 4.0 million) in the advent of market crashes.

Coinbase’s Valuation Amid Competitors

Ahead of its public market debut, Coinbase is valued at $68 billion, a valuation that can shoot up to $100 billion based on its fully-diluted market share. The company’s valuation, which many have seen to be conservative, places the trading platform at the echelon of most exchanges including Robinhood which boasts of only 13 million users.

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JPMorgan Chase execs weigh in on stablecoin regulation, crypto competition

During JP Morgan Chase’s Q4 2020 earnings call, CEO Jamie Dimon and CFO Jennifer Piepszak weighed in on the OCC’s recent approval of banks using stablecoins for payments, as well as whether or not the approval will have any impact on the development of JPM Coin. 

During the question-and-answers portion of the call, Portales Partners analyst Charles Peabody asked about the approval from the OCC for banks to use public blockchain networks for payments.

“That guidance enables an offering of stable going on a public blockchain. So that doesn’t impact JPM coin. JPM coin, you should think about as the tokenization of our customer deposits,” responded JPM CFO Jennifer Piepszak, according to a transcript of the call.

However, she did not rule out the possibility of a JPM-backed stablecoin if customers showed interest.

“So, it’s obviously very early. We will assess use cases and — and customers demand. But — but it’s still too early to see where this goes for us.”

JPM CEO Jamie Dimon was also quick to jump in and mention that the bank is “using blockchain for sharing data with banks already and so we are at the forefront of that which is good.”

Debuted in October of 2020, JPM Coin is largely used on the backend of JPM’s payments systems, helping to settle nearly $6 trillion in payments on a daily basis. On the call, Piepszak also described the JPM Coin project as “tokenizing deposits to make payments easier for client.”

Ultimately, Dimon seemed to imply to crypto payments settlement won’t greatly change how JPM operates.

“There is this talk about several banks having digital currencies and stuff like that, right?” Dimon concluded. “[…] So I — I do expect that stuff is coming and it may not change our world that much”

Dimon may be underestimating the impact crypto will have on the payments landscape, however. 

Paypal, one of the Fintech giants that Dimon mentioned by name as a payments competitor, confirmed that crypto payments will be available starting in 2021. The CEO — a former noted skeptic of cryptocurrencies — made it clear that payments will become an increasingly crowded and cutthroat field over the next decade:

I expect it to be very, very tough competition in the next 10 years. I expect to win. So help me God.