The current market conditions in the crypto market have undoubtedly negatively impacted several cryptocurrency firms, with many firms experiencing losses on their balance sheet. In a recent development, crypto exchange Bitstamp seems to have suffered a similar fate following the release of its 2022 financial report.
Bear Market Woes
UK crypto exchange Bitstamp Ltd recently published its full financial report for 2022. The financial report covers the company’s revenue, gross profit, administrative expenses, assets, and loss in 2022, with a year-on-year comparison with the 2021 financial year.
A major highlight is the huge margin between Bitstamp’s revenue in 2022 and 2021. In 2022, the company recorded a revenue of €29,146,686, while it recorded a total revenue of €109,054,390 in 2021.
Furthermore, the crypto exchange suffered a loss in the 2022 financial year, recording a loss of €7,028,663. This is a further testament to the decline the company experienced in 2022, considering that it recorded a whooping sum of €37,043,961 in 2022.
Besides the unfavorable market conditions, Bitstamp also attributed its poor performance to reduced trading volume on the exchange. Bitstamp’s trading volume dropped from £117 million to just under £55 million in the same year. This occurred due to the company transferring some of its business to 3 of its subsidiaries, and it had to also transfer the associated trading accounts of some of its customers as part of the procedure.
What is, however, mind-boggling is the fact that there is evidence to suggest that the company didn’t take enough measures to cushion the effect of the market conditions, which undoubtedly affected its business. For instance, one would expect that the company will try to cut certain costs, but instead, it spent Bitstamp €57,239,419 in 2022, amounting to over €7,000,000 more than it spent in 2021.
Total crypto market cap continues to fluctuate heavily | Source: Crypto Total Market Cap on Tradingview.com
Another Loss In 2023?
2023 isn’t looking so positive for the crypto exchange either, as the company has stated that it could record another loss if the crypto winter runs through the end of the year. However, unlike in 2022, it seems the company has put enough measures in place in case it experiences a loss. Part of these measures include “securing additional working capital, cost reduction measures, and the launching of new initiatives to build additional revenue.”
Bitstamp is just one of many cryptocurrency firms suffering the negative impacts of the crypto winter. Recent reports show that popular cryptocurrency company Galaxy Digital also recorded a net loss of about $46 million during Q2. The New York-based company owned by Bitcoin bull and billionaire investor Micheal Novogratz recorded a 54% decline in trading revenue compared to the last quarter.
According to Novogratz, this decline is attributable to “continued uncertainty and regulatory pressure” within the crypto industry as the firm strives to meet investors’ expectations.
Similarly, Colorado-based Bitcoin mining company Riot Platform disclosed a second-quarter net loss of about $27.7 million.
While some firms continue to suffer from the current market conditions, others have suffered financial blows due to continued regulatory scrutiny and several legal battles. One of those is Binance, the world’s largest crypto exchange by trading volume, which laid off more than 1,000 employees and cut employees’ benefits in July to deal with the current financial hardship.