Google said Tuesday that it will use Coinbase's cloud infrastructure to enable customers to pay for cloud services with cryptocurrencies in early 2023.
Shares of Coinbase rose as much as 8.4% in Tuesday's trading session, but the stock remains down over 70% for the year.
As a result of the deal, announced at Google's Cloud Next conference, Google might be able to attract cutting-edge companies to its services, in a fierce, fast-growing market where Google's top competitors do not currently permit clients to pay with digital currencies. Google's cloud business helps diversify the company's revenue away from advertising. It now accounts for 9% of the company's revenue, up from less than 6% three years ago. The company's business is expanding at a faster rate than Alphabet as a whole.
According to Jim Migdal, Coinbase's vice president of business development, Coinbase, which generates the majority of its revenue from retail transactions, will move its data-related applications from the Amazon Web Services cloud to Google.
A few Web3 customers who wish to make cryptocurrency payments will be able to use the Google Cloud Platform infrastructure service, thanks to an integration with Coinbase Commerce. This is according to Amit Zavery, vice president and general manager at Google Cloud and head of the platform, in an interview with CNBC. 'Web3' stands for decentralized and distributed internet services that cannot be controlled by large internet companies such as Facebook or Google.
Google will allow many more customers to make payments using cryptocurrency in the future, according to Zavery. Bitcoin, Bitcoin Cash, Dogecoin, Ethereum, and Litecoin are among the ten currencies supported by Coinbase Commerce. Over the past year, the prices of Bitcoin, Dogecoin, and Ethereum have all declined by over 60%.
The terms of the deal were not disclosed. Nonetheless, Coinbase will earn a percentage of the transactions that go through Coinbase Commerce, Migdal explained.
There was no guarantee that Google would choose Coinbase as its payment processor. PayPal, for example, allows businesses to accept payments in digital currencies. “We did look at other companies for the cryptocurrency side of it,” Zavery said. He believed Coinbase had the greatest chance in the end.
In addition, Google is exploring how it can use Coinbase Prime, a service that securely stores organizations' cryptocurrencies and allows them to execute transactions with them. Zavery said Google would experiment and “see how we can participate” in managing cryptocurrency assets. Among the companies that have added digital currencies to their balance sheets are Block (the payments company formerly known as Square), Coinbase, MicroStrategy, and Tesla. It can be a risky endeavor. A decline in the value of Coinbase's cryptocurrency holdings resulted in an impairment charge of $377 million in August.
In May, Google announced it was exploring the possibility of supporting payments using digital currencies. The discussion between Coinbase and Google has been ongoing for several months, with discussions about supporting commerce transactions, cloud computing, and the Prime service all taking place simultaneously. He stated, "We decided to bring them together.".
The cloud division of Google has become increasingly interested in blockchain technologies, such as nonfungible tokens, or NFTs. In the past, Google's cloud chief, Thomas Kurian, has advocated for growth in major industries, such as the media and retail. The company announced this year that it would establish teams to promote blockchain business and create tools that third-party developers could use to create blockchain applications.
