Is CoinDesk selling at a loss with a valuation of $125 million after being in business for ten years?

Is CoinDesk selling at a loss despite ten years in business and a $125 million valuation?

On the occasion of its tenth anniversary and after being held by DCG Group for eight years, the encrypted media CoinDesk has changed ownership again.

According to The Wall Street Journal’s report on July 20th, an investor group has acquired CoinDesk for nearly $125 million. Insiders say that the investment group is led by Matthew Roszak from Tally Capital, a private investment company focused on Web3, and Peter Vessence from Capital 6, a venture capital and family office.

In January 2016, CoinDesk was acquired by DCG Group for $500,000 to $600,000. Since the acquisition, CoinDesk has faced questions about DCG’s manipulation of its editorial independence and has experienced employee resignations due to its office being merged with DCG headquarters. However, it is undeniable that as a veteran cryptocurrency media outlet with a ten-year history, CoinDesk remains one of the most popular media in the industry.

Especially at the beginning of the FTX crisis last year, CoinDesk was the first to disclose the balance sheet issues of Alameda Research, exposing the chaotic nature of FTX. This undoubtedly contributed to bursting the bubble crisis that has plagued the cryptocurrency industry for many years, and to some extent defended its media reputation.

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However, affected by the FTX crisis, CoinDesk’s parent company, DCG, is also deeply involved in a debt crisis. At the beginning of the year, Gemini co-founder Cameron Winklevoss directly criticized DCG CEO Barry Silbert, accusing DCG and its subsidiary Genesis of maliciously withholding $900 million from Gemini’s clients. Consequently, “Will Genesis be the first cryptocurrency scandal of 2023?” became a hot topic of discussion.

The spat between DCG and Gemini may have an element of entertainment gossip, but the debt crisis revealed within it should not be taken lightly. As one of DCG’s subsidiaries, while CoinDesk dared to criticize industry leader FTX, it also got caught in the fire.

On January 19th, CoinDesk CEO Kevin Worth publicly announced that they are seeking to partially or completely sell their business to raise development funds. According to him, CoinDesk has already received a large number of acquisition intentions. Subsequently, Mars Finance founder Wang Feng, Cardano co-founder Charles Hoskinson, and other cryptocurrency KOLs have publicly expressed their intentions to acquire CoinDesk. Binance CEO CZ was also rumored to be interested in acquiring CoinMarketCap, a subsidiary of CoinDesk, but he quickly denied it.

“It may be a good business, but it’s not suitable for our business coverage,” CZ explained. Considering that Binance has been facing profitability issues for many years after acquiring CoinMarketCap, this is easily understandable.

“CoinDesk has problems with bloated staff and shrinking revenue, and there are no meaningful research/institutional products,” revealed cryptocurrency KOL @AP_Abacus in May this year. After excluding the bubble in the bid for CoinDesk, the latest verbal offer was $30 million.

Just last year, a $300 million acquisition proposal was considered seriously undervalued. This is because CoinDesk generates $50 million in revenue annually through online advertising and its flagship event, the “Consensus Conference.”

However, during the bear market of encryption, the longer it takes, the more it depreciates. This year’s Consensus conference has been relatively deserted compared to previous years, with a decline in the number of participants and sponsors. As of the beginning of this year, Charles, the co-founder of Cardano, stated that a $200 million offer was a bit high and that the transaction would be difficult.

After the dust settled, the market finally valued CoinDesk at $125 million. If it weren’t for the bear market, CoinDesk might have been able to sell at a better price. One reasonable explanation is that after several negotiations and considerations, especially with a serious debt crisis, DCG had to reluctantly let go.

In fact, it’s not just CoinDesk seeking survival through a sale. During the bear market of encryption, facing a universal crisis of survival, can the encryption media be an exception? In February of this year, another encryption media, The Block, also laid off 27 people, nearly half of whom were editors and researchers.

Currently, it is unclear what direction the investment group that acquired CoinDesk will take its business. If the revenue problems faced by the encryption media cannot be solved universally, perhaps it will change hands again. However, as Bitcoin celebrates its 14th anniversary, it is not easy for the ten-year-old encryption media to exist. The industry needs independent and rational media to build together.

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