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Google selects Coinbase to take cloud payments with cryptocurrencies

Google said it will rely on Coinbase to start letting some customers pay for cloud services with cryptocurrencies early in 2023.

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Google
Google

Google said it will rely on Coinbase to start letting some customers pay for cloud services with cryptocurrencies early in 2023, while Coinbase said it would draw on Google’s cloud infrastructure.

Coinbase shares rose as much as 8.4% in Tuesday’s trading session, although the stock is still down over 70% for the year.

The deal, announced at Google’s Cloud Next conference, might succeed in luring cutting-edge companies to Google in a fierce, fast-growing market, where Google’s top competitors do not currently permit clients to pay with digital currencies. The cloud business helps diversify Google parent Alphabet away from advertising, and it now accounts for 9% of revenue, up from less than 6% three years ago, as it is expanding more quickly than Alphabet as a whole.

Coinbase, which generates a majority of its revenue from retail transactions, will move data-related applications to Google from the market-leading Amazon

Web Services cloud, which Coinbase has relied on for years, said Jim Migdal, Coinbase’s vice president of business development.

The Google Cloud Platform infrastructure service will initially accept cryptocurrency payments from a handful of customers in the Web3 world who want to pay with cryptocurrency, thanks to an integration with the Coinbase Commerce service, said Amit Zavery, vice president and general manager and head of platform at Google Cloud, in an interview with CNBC. Web3 is a buzzword that has come to stand for decentralized and distributed internet services that can’t be controlled by big internet outfits such as Facebook or Google.

Over time, Google will allow many more customers to make payments with cryptocurrency, Zavery said. Coinbase Commerce supports 10 currencies, including Bitcoin, Bitcoin Cash, Dogecoin, Ethereum and Litecoin. Bitcoin, Dogecoin and Ethereum prices have all declined over 60% in the past year.

Terms of the deal weren’t disclosed. But like other Coinbase Commerce arrangements, Coinbase will earn a percentage of transactions that go through it, Migdal said.

It wasn’t a guarantee that Google would go with Coinbase for the payments portion of the deal. PayPal, for one, offers businesses a way to take payments with digital currencies. “We did look at other companies for the cryptocurrency side of it,” Zavery said. Ultimately, he said, Coinbase had the greatest capability.

Google is also exploring how it can use Coinbase Prime, a service that securely stores organizations’ cryptocurrencies and allows them to execute trades.

Zavery said Google will experiment and “see how we can participate” with managing cryptocurrency assets. Block (the payments company formerly known as Square), Coinbase, MicroStrategy and Tesla

are among the companies that have added digital currencies to their balance sheets. That can be a risky endeavor.

Coinbase announced a $377 million impairment charge tied to a decline in the value of its cryptocurrency holdings in August.

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