Why did Coinbase's operating expenses drop significantly in 2023?

Coinbase's operating expenses dropped significantly in 2023 due to a combination of strategic cost-cutting measures and reduced revenue-related expenses:

1. **Strategic Cost Cutting**: Coinbase implemented a significant cost-cutting initiative, reducing expenses by 45% to ensure positive adjusted EBITDA in any market scenario. This involved slashing operating expenses to prepare for market volatility and to focus on profitability.
2. **Reduced Revenue-Related Expenses**: With a substantial year-over-year increase in net revenue, the costs associated with generating revenue, such as transaction expenses, technology and development, and sales costs, could have decreased as a percentage of total revenue. This is because these expenses tend to be more variable and can be scaled back when revenue growth slows.
3. **Operational Efficiency Focus**: Coinbase focused on operational efficiency, which likely included streamlining processes, reducing waste, and optimizing resource allocation. This could have led to lower operating expenses without compromising core services.
4. **Global Expansion and Prioritization of Core Services**: By focusing on core services and prioritizing compliance and user experience, Coinbase may have reduced costs associated with less profitable or experimental projects. This strategic shift likely involved closing or scaling back non-core services that were not generating sufficient returns.

In summary, Coinbase's operating expenses dropped significantly in 2023 due to a combination of strategic cost-cutting measures, reduced revenue-related expenses, operational efficiency focus, and a shift in strategy to prioritize core services and global expansion.