A cryptocurrency price crash and the onset of a latest so-called “crypto winter” has left many firms within the industry facing a liquidity crisis.
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Not even Google is immune from the Crypto winter.
In Alphabet’s third-quarter earnings call on Tuesday, Philipp Schindler, Google’s chief business officer, blamed a slowdown in revenue growth partly on reduced ad spending by cypto firms and other financial firms.
“Within the third quarter, we did see a pullback in spend by some advertisers in certain areas in search,” Schindler said. “For instance in financial services, we saw a pullback within the insurance, loan, mortgage, and crypto subcategories.”
Google’s overall ad growth of 6% within the quarter was the weakest for any period since 2013, aside from one quarter at first of the pandemic. YouTube ad revenue shrank from a yr earlier. CEO Sundar Pichai said the “difficult macro climate” is having an impact on Google’s ad business.
Schindler referenced the crypto pullback twice, but he didn’t provide any additional color or specifics. The cryptocurrency industry has been battered in 2022, as investors have fled dangerous assets and sold out of digital coins and the related stocks that they bid up the prior couple years.
Bitcoin and ethereum have each lost near 60% of their value this yr. Crypto exchange Coinbase, which went public in 2021, is down by over 70%. Meanwhile, the industry has been beset by bankruptcies as hedge funds and lenders saw their liquidity dry up and, in some cases, were forced to default on debt. Celsius Network, Voyager Digital and Three Arrows Capital are a few of the more notable names that were forced out of business.
Elsewhere, firms have downsized. Blockchain.com laid off 25% of its staff in July, Coinbase cut 18% of its workforce the prior month, and Crytpo.com has undertaken two rounds of layoffs this yr.
For Google, there’s hope that the crypto sell-off represents only a short-term blip, as the corporate sees clear opportunities for growth in the longer term. Earlier this month, Google said it should depend on Coinbase to begin letting customers pay for cloud services with cryptocurrencies in 2023. Moreover, Coinbase will move data-related applications to Google’s cloud infrastructure from Amazon Web Services, which the corporate has relied on for years.
— CNBC’s Jennifer Elias and Jordan Novet contributed to this report.
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