BlockFi's Secret Financials: The Good, the Bad, and the Ugly
Let's explore the world of BlockFi and examine the financials of the business. But before we do that, did you know that the term "cryptocurrency" was first used in print in 1998? It was a new term for digital money that was proposed by a man by the name of Wei Dai.
Image Source : Pixabay
On to BlockFi now. They are a platform for crypto lending that enables users to borrow fiat money or stablecoins using their crypto assets as security. A massive $50 million was raised in a Series C investment round in 2020, bringing them total funding to $176 million. However, a recent survey indicates that things may not be as bright as they could seem in terms of their financial situation.
The report states that BlockFi had a net loss of $9.4 million in 2019, and their net income for 2020 was only $1.7 million. This is despite the fact that they had a significant increase in revenue during that time, going from $1.7 million in 2019 to $10.7 million in 2020. So, why the discrepancy?
It seems that the main issue is BlockFi's expenses. They had a total operating expense of $11.4 million in 2019, which increased to $12.4 million in 2020. This is largely due to an increase in general and administrative expenses, as well as an increase in research and development expenses.
Image Source : Pixabay
This is not at all uncommon for companies in the early stages of growth, but it does raise some questions about the company's ability to generate profits in the future. However, it is important to mention that the company had a tremendous growth in terms of assets under management (AUM) which more than doubled, going from $248 million in 2019 to $632 million in 2020.
Another interesting point is that the company's 2020 net income was largely due to an $8 million gain on the sale of Bitcoin, which shows that the company is not dependent on the interest income generated by the loans made to customers, which was $1.1 million in 2020.
Overall, it's important to keep in mind that BlockFi is still a relatively new company and they're operating in a highly volatile and rapidly changing industry. It's possible that they'll be able to turn things around and become profitable in the future. But for now, it seems that their financials are not as pretty as they may have hoped.
Image Source : Pixabay
It is critical to remember that BlockFi is a young, rapidly expanding business operating in a dynamic, quickly evolving sector; as a result, it's not unusual for them to experience a net loss and significant operating costs. However, it is crucial to note that the company's net income is not solely derived from the interest income from loans provided to consumers, despite the fact that the company has had great development in terms of AUM.
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