California-based bitcoin payment processor Coinbase is aiming to raise a new investment that is expected to total about $40-60 million. Venture capital company DFJ is planned to be a new and the largest investor in this funding round. Neither Coinbase, nor DFJ provided any comments.
Since Coinbase creation in 2012, the company raised $31 million in two funding rounds. In May 2013, it received $5 million, the largest investment for a bitcoin startup at that time. In December, the company raised $25 million in a series B round led by venture capital fund Andreessen Horowitz. Union Square Ventures, RRE Ventures, Union Square Ventures, Horizons Ventures, Ribbit Capital, and SV Angel were among the investors.
The new investments will turn Coinbase into the best-capitalized digital currency firm after BlockChain and BitPay. Last month, Blockchain secured $30.5 million in series A funding round, with Lightspeed Venture Partners and Wicklow Capital being the leading investors.
Coinbase users have created two million bitcoin wallets through its service. The firm’s customers include Expedia, Stripe, PayPal, Dell and Overstock.com. Coinbase generates profits by charging a fee to buy and sell bitcoins and charges merchants 1% after their first $1 million in bitcoin payments.
With about 1.8 million users globally, Coinbase has recently expanded its operations in 18 European states, including Italy, Spain, France, Ireland, Sweden and Switzerland.
Coinbase faced some difficulties in raising its latest funding round that could limit the total amount of investments. The bitcoin price volatility and its recent slowdown, as well as the control from the state and federal regulators in the U.S. are among the main problems.
The cryptocurrency was priced at around $600 in the beginning of the summer and the price has then fallen dramatically. It declined by 50% and fell below $400 during the last two weeks.
Besides, there is uncertainty about how governments will handle virtual currency within time. Still, that hasn’t stopped businesses to invest in Coinbase and other bitcoin startups.
However, more and more investors understand the importance of digital currency and its role in the financial sector. Some bitcoiners believe the digital currency will be widely used in countries with high volatility rates of the local currency.
The low fees for buying bitcoin is one of the reasons more merchants start accepting bitcoin as a payment method. The fees are much lower if compared with fees charged by credit card processors.
According to the State of Bitcoin report, elaborated by CoinDesk, the venture capital investment in the bitcoin industry would achieve $290 million by the end of 2014.