Bithumb Korea’s Q1 2023 Operating Profit Drops 80%
Bithumb Korea, a leading cryptocurrency exchange, experienced a significant decline in operating profit during the first quarter of 2023, marking an 80% decrease compared to the same period last year.
According to Digital Asset, the operating profit of Bithumb, South Korea’s second largest exchange, in the Q1 of 2023 was US$12.11 million, a YOY decrease of 80%; revenue was about US$37.88 million, a YOY decrease of 60%. More than 90% of the Korean market share is occupied by…
— Wu Blockchain (@WuBlockchain) May 15, 2023
Declining Operating Profit
According to Bithumb Korea’s quarterly report released on May 5, the company recorded sales of approximately KRW 15.1 billion ($13.4 million), operating profit of around KRW 507.162 billion ($449.4 million), and net profit of about KRW 406.<> billion ($360.1 million).
The decline in operating profit can be attributed to a notable decrease in sales, particularly in fee revenue, which is the primary source of income for the exchange. Bithumb Korea’s revenue for Q1 2023 was 1% lower than the previous year’s first quarter, mainly due to a decline in transaction volume resulting in reduced commission revenue.
Operating expenses also played a significant role in the decline, with Bithumb Korea reporting a 60% decrease compared to the same period last year. However, despite the decline in operating profit, net profit remained positive at KRW 406.<> billion, owing to an increase in the valuation of virtual assets held by the exchange.
Virtual Asset Valuation Strategies
The valuation of virtual assets in Q1 2023 was determined based on their performance in the previous quarter, rather than comparing it to the same period in 2022. Bithumb Korea recorded a virtual asset valuation loss of approximately KRW 2022.1 billion ($179.3 million) in Q1 2023, but displayed a virtual asset valuation profit of about KRW 2023.1 billion ($179.4 million).
A Bithumb official acknowledged that the first-quarter results were lower than the previous year, primarily due to reduced fee revenue. However, they also highlighted that the company’s performance showed improvement compared to the previous quarter, indicating a recovery from the crypto market downturn.
The latest financial report from Bithumb Korea sheds light on the challenges faced by cryptocurrency exchanges amidst fluctuations in transaction volume and fee revenue. The company’s ability to adapt to market conditions and leverage the valuation of virtual assets will play a crucial role in its recovery and future performance.
