Only one of South Korea’s four largest cryptocurrency exchanges is profitable amid industry downturn

South Korea is one of the four countries in the world with the most active digital currency transactions, with four major digital currency exchanges: Upbit, Bithumb, Coinone and Korbit. According to the Korea Business Daily: Among these four companies, only Upbit has achieved profitability.

The biggest loser was Bithumb. Last week, its parent company BTC Korea.com announced a net loss of 205.4 billion won (about $180.7 million) in 2018. These losses were mainly attributed to the depreciation of the digital currencies held by Bithumb.

Korbit reported a net loss of 4.58 billion won ($40.3 million) in fiscal 2018. Coinone also lost 5.8 billion won ($5.1 million) in the second half of last year.

UPBIT earns bragging rights

In contrast, Upbit reported a net profit of 143.3 billion won ($126.03 million). This was due to the exchange’s lower digital currency holdings compared to its competitors.

The losses are not surprising, as some of South Korea’s four largest exchanges have said they are also going through a tough time amid the downturn in the cryptocurrency market. Last month, Bithumb announced it was laying off more than half of its staff, reducing its staff from 310 to 150.

By publishing its net profit, Upbit joins a club of a select few companies, including Binance, which is estimated to have made $78 million in net profit in the first quarter of 2019. While Binance does not publicly disclose its financials, this figure is estimated based on quarterly buybacks of BNB.

Although Binance has not confirmed the exact amount, the fact that it is profitable is beyond doubt. Two months ago, the company's chief financial officer said in an interview with CNBC that the downturn in the digital currency market last year did not affect the company's profitability: So far, even in the bear market, we are still operating a profitable business.

Binance tries to outdo itself

If Binance intends to exceed last year’s profit target, it may need to do more in the coming quarters based on its first quarter net profit estimate. In July 2018, Binance CEO Changpeng Zhao told Bloomberg that the exchange’s net profit target for this year is $500 million to $1 billion.

Still, Binance and Upbit’s enviable position in the digital currency industry is unsurprising. In March last year, the two exchanges were estimated to have averaged more than $3.4 million in daily revenue.

Average daily volume | Source: howmuch.net