Understanding Coinbase's 10-K Cash Flow Statement & the impacts of ASU 2023-08 using Python & Ai

Mar 23, 2025By Chris Wade
Chris Wade

Introduction
As bookkeepers and accountants, we know the statement of cash flows is a critical tool for understanding a company’s financial health. According to the textbook classic, "Intermediate Accounting" (Warfield 2022), the statement of cash flow's primary purpose is to provide insights into an entity’s cash receipts and payments over a period, while a secondary objective is to report on operating, investing, and financing activities. With the rapid adoption of digital assets in business, I wanted to take a closer look at Coinbase Global, Inc.’s most recent Statement of Cash Flows from their 2024 10-K report. 

Coinbase's cash flow statement reveals a remarkable financial transformation from 2022 to 2024:

  • Net Income: A dramatic improvement from a $2.52 billion loss in 2022 to a substantial $2.58 billion profit in 2024
  • Operating Cash Flow: Increased from negative $1.59 billion in 2022 to positive $2.57 billion in 2024
  • Cash Reserves: Grew from $9.43 billion in 2022 to $14.61 billion by the end of 2024
  • Overall Liquidity: Net increase in cash of $5.10 billion in 2024, compared to a modest increase of $117 million in 2023

Impact of ASU 2023-08 on Financial Reporting
The 2023-08 Accounting Standards Update significantly changed how Coinbase reports its cryptocurrency holdings, as evidenced in their cash flow statement. Prior to this update, we can observe several crypto-specific line items that have been discontinued in 2024:

Pre-ASU 2023-08 Reporting (2022-2023)

  • "Gains on crypto assets held for operations, net"
  • "Gains on crypto assets held for investment, net"
  • "Gains on crypto assets held, net (prior to ASU 2023-08)"
  • "Crypto asset impairment expense (prior to ASU 2023-08)"
  • "Crypto assets received as revenue (prior to ASU 2023-08)"
  • "Crypto asset payments for expenses (prior to ASU 2023-08)"
  • "Purchase of crypto assets held (prior to ASU 2023-08)"
  • "Sale of crypto assets held (prior to ASU 2023-08)"

Post-ASU 2023-08 Reporting (2024)
In 2024, we see simplified reporting with only:

  • "Gains on crypto assets held for operations, net" ($71,725 thousand)
  • "Gains on crypto assets held for investment, net" ($687,055 thousand)

This transformation reflects the new requirement to recognize digital assets at fair value with unrealized gains and losses reflected in the income statement, rather than treating them as indefinite-lived intangible assets subject to impairment testing.

Operating Activities Analysis
Coinbase's operating activities show several notable trends:

  1. Stock-based Compensation: Increased steadily from $780,668 thousand in 2023 to $912,838 thousand in 2024, suggesting expanded workforce or higher equity incentives
  2. Deferred Income Taxes: Shifted from a $216,334 thousand benefit in 2023 to a $151,315 thousand expense in 2024, indicating better profitability
  3. Net Changes in Operating Assets and Liabilities: Negative $478,002 thousand in 2024 compared to positive $326,206 thousand in 2023, suggesting increased working capital requirements as the business expands

Investing Activities Insights
The investing section reveals Coinbase's strategic resource allocation:

  1. Fiat Loan Activity: While originating $1.70 billion in fiat loans, they also received $1.49 billion in repayments, indicating a substantial lending business
  2. Discontinued Crypto Trading: No purchases or sales of crypto assets for investment in 2024, compared to significant activity in previous years ($277,357 thousand in purchases and $461,325 thousand in sales during 2023)
  3. Other Investing Activities: Negative $70,830 thousand, potentially indicating continued investment in infrastructure

Financing Activities Transformation
The financing section demonstrates Coinbase's evolving capital structure:

  1. Customer Custodial Fund Liabilities: Massive $1.64 billion increase in 2024, compared to decreases in previous years, suggesting growing customer deposits
  2. Convertible Notes: Issuance of $1.25 billion in 2024, providing significant capital for expansion
  3. Fiat Collateral Management: Received $567,806 thousand but returned $544,228 thousand, showing active management of collateralized positions


Liquidity Ratio Analysis

  • Operating Cash Flow to Net Income Ratio (2024): 0.99 ($2,556,844/$2,579,066) This indicates that nearly 100% of net income is being converted to operating cash flow, demonstrating high quality of earnings
  • Cash Flow to Capital Expenditure Ratio: While not directly shown, the minimal investing outflows relative to operating inflows suggest substantial free cash flow generation
  • Cash to Total Assets Ratio: With $14.61 billion in cash and equivalents by 2024 year-end, Coinbase maintains substantial liquidity


Now for the fun part 🎉 Let's use some Python to create some charts and further review Coinbase's historical Statement of Cash Flows. 

Python Source Code (Found Here) via Google Colab. 

Conclusion
Coinbase's cash flow statement demonstrates a company that has successfully navigated the volatile cryptocurrency market to achieve substantial positive cash flows across all three categories: operating, investing, and financing activities. The implementation of ASU 2023-08 has significantly simplified their reporting of crypto-related transactions, providing greater transparency for investors and analysts.

For bookkeepers and accountants working with Web3 clients, Coinbase's financial reporting offers a valuable model for how to structure cash flow statements that comply with evolving accounting standards while clearly communicating the unique aspects of cryptocurrency operations.

As Yahoo Finance noted, "Coinbase reported magnificent year-on-year revenue growth of 138%, and its $2.27 billion of revenue beat Wall Street's estimates by 22%" (Bastian, 2025). This financial performance, coupled with the company's strong cash position of $14.61 billion, positions Coinbase favorably for continued growth in the expanding digital asset ecosystem.

References
Bastian, J. (2025, February 13). Coinbase (NASDAQ) Surprises With Strong Q4. Yahoo Finance. https://finance.yahoo.com/news/coinbase-nasdaq-coin-surprises-strong-212623957.html

Coinbase Global, Inc. (2025). Form 10-K for the fiscal year ended December 31, 2024. U.S. Securities and Exchange Commission. Retrieved March 23, 2025, from https://www.sec.gov/ix?doc=/Archives/edgar/data/0001679788/000167978825000022/coin-20241231.htm

Warfield, D.E., Kieso, J.J., & Weygandt, T.D. Intermediate Accounting (18th Edition). Wiley Global Education US, 2022.