Coinbase Rejected Bitcoin Investment Strategy Over Fears It Could Undermine Business

Coinbase reportedly considered adopting a Bitcoin-heavy treasury strategy similar to that of Strategy’s Michael Saylor but ultimately decided against it, fearing it could undermine its core exchange business.

According to a May 9 Bloomberg interview, CEO Brian Armstrong said the idea of converting a large portion of Coinbase’s balance sheet into Bitcoin had been floated multiple times over the past 12 years.

“There were definitely moments where we thought, should we put 80% of our balance sheet into Bitcoin?” Armstrong said.

However, he explained that the company made a conscious decision to manage risk, suggesting that such a move could have jeopardized Coinbase’s liquidity and future operations.

Coinbase Avoided Crypto Bets to Stay Neutral with Customers

Chief Financial Officer Alesia Haas echoed Armstrong’s caution, stating that Coinbase deliberately avoided entering into competition with its own customers by betting on specific cryptocurrencies.

Despite that, Coinbase remains significantly exposed to Bitcoin. In its latest earnings report on May 8, the firm revealed a $153 million crypto purchase in Q1, primarily in BTC.

According to BitcoinTreasuries.net, Coinbase now holds 9,480 BTC, worth nearly $1 billion at current prices.

This makes it the ninth-largest corporate Bitcoin holder globally, behind firms such as MicroStrategy, Tesla, and Marathon Digital Holdings.

While Coinbase held back from a full-scale Bitcoin pivot, other companies have embraced Saylor’s strategy, using equity and debt to fund large Bitcoin acquisitions.

Globally, over 100 public companies, 40 ETF issuers, and even 12 nation-states now report holding Bitcoin.

Coinbase also made headlines this week by acquiring crypto derivatives platform Deribit for $2.9 billion, marking the industry’s largest merger to date.

The acquisition significantly boosts Coinbase’s presence in the crypto derivatives market, an area it previously accessed only through its Bermuda-based operations.

Deribit processed over $1 trillion in trading volume in 2024 and holds $30 billion in open interest.

Coinbase said the acquisition positions it as the new “global leader” in crypto derivatives.

Coinbase Q1 Revenue Climbs, But Profit Falls 94%

Coinbase reported mixed first-quarter results, with revenue rising 24% year-over-year to $2 billion, but falling short of analyst expectations and down 10% from the previous quarter.

While transaction revenue grew to $1.26 billion, its subscription and services division—covering staking and custodial offerings—rose 37% to nearly $700 million, reflecting growing diversification beyond trading.

Despite the revenue uptick, net income plunged 94% to $66 million as the company marked down its crypto holdings amid market volatility.

Adjusted earnings stood at $526.6 million, or $1.94 per share—still below last year’s figure of $2.53. Operating expenses surged 51% to $1.3 billion due to aggressive marketing and asset write-downs.

Coinbase’s earnings were weighed down by unpredictable macroeconomic conditions and fluctuations in digital asset prices.

However, the company noted its second-highest ever monthly user count, with CFO Alesia Haas highlighting increased engagement across non-trading services.

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