Revenues for North America’s biggest cryptocurrency exchange skyrocketed as Bitcoin surged to new highs in the first quarter of 2021. Coinbase reported revenues of $1.8 billion, up from $191 million a year ago. Net income for the San Francisco-based company jumped to $771 million from $32 million a year earlier.

Coinbase’s sterling quarterly performance occurred during a period when the market capitalization of cryptocurrency markets surpassed $2 trillion. Bitcoin, which accounted for 39% of overall trading volume on the exchange, whizzed past a $1 trillion market capitalization and reached a record high price of $63,246 on the day of Coinbase’s debut in public markets last month.

The prospect of profits coupled with increased media attention to cryptocurrencies brought more customers to Coinbase’s platform. The number of verified users at the exchange rose to 56 million, an increase of 12 million in just a single quarter. More than 8,000 institutions also trade on Coinbase now and they accounted for 64% of the total trading volume of $335 billion in the last quarter.

Expenses related to cryptocurrency transaction, totaling $234.1 million, processes formed the single biggest chunk of Coinbase’s spending during the quarter. Included in this category were account verification fees, payment processing fees, and transaction fees associated with Bitcoin trading. But increased spending on transactions is not expected to impair revenues at Coinbase. In its earnings release, the company said that the average revenue per user for 2021 will exceed its historical average of between $35 to $45.

A Bumper Quarter But a Bumpy Road Ahead

Coinbase’s bumper quarter, however, is not a guarantee of its trajectory going forward.

While the company has managed to weather the volatility of cryptocurrency markets, it is still find an even bearing in public markets. Its stock price fell by 25% to $256.76 in less than three weeks after a public market debut. Yesterday, after the earnings announcement, it slid by 6% before recovering.

Coinbase’s price swings are indicative of investor’s unfamiliarity with an unproven and nascent market. The price volatility of cryptocurrencies doesn’t help either. Coinbase’s main source of revenue is transaction fees from traders. The amount of those fees falls during times of drawdown in crypto prices. To that end, Coinbase warned investors about its future performance in its investor release.

“…crypto is a young volatile industry and there will come a day when times are harder. We know this because we’ve experienced major crypto winters where financing was difficult to get, partners cut us off, and we lost large parts of our employee base,” the company wrote. “We seek to operate the company at roughly break even in terms of profitability, smoothed out over time, for the time being.”

The company also stated that it plans to add more assets for trading, including Dogecoin, in the near future. The company plans to spend heavily, amounting to between 12% to 15% of its net revenue, on sales and marketing this year to draw in more customers and stabilize its revenue stream.