Chris Evans

25th May 2023


Cryptocurrency continues to be a volatile investment but is financial stability growing in the blockchain market?

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There is a growing interest in the adoption of blockchain and cryptocurrency technology by mainstream financial institutions as part of the drive to turn the UK into a post-Brexit tech powerhouse.

Several UK-based blockchain startups have gained significant investment and attention in recent years, such as Chainvine, Trustology, and Quant Network. These companies are developing blockchain solutions for various industries, including supply chain management, digital identity verification, and cross-border payments.

There are 249 UK-based, high-growth companies that are developing blockchain-driven software and blockchain services. The vast majority (63%) of these companies are start-ups currently in the seed stage of their development. This reflects the embryonic nature of the blockchain market and the companies within it.

However, an increasing number of blockchain companies are reaching maturity and becoming more established. This increasing maturity of the market has seen analysts Plimsoll produce a brand new study of the UK Blockchain sector.

Plimsoll has produced the first-ever financial study of the health and future stability of the blockchain sector. The latest Plimsoll Analysis individually assesses the top 200 companies and shows a few developing trends that should be of concern or interest for business leaders throughout the industry, including:

Over a quarter of the UK’s 200 leading blockchain companies are financially exposed

58 of the 200 leading British blockchain companies included in the Plimsoll Analysis have been rated as “Danger” in the latest Plimsoll Analysis. 9 out of 10 previously failed companies were given such a “Danger” rating up to 2 years prior to their demise. This is an early warning that even unicorn companies must pay heed to financial fundamentals.

M&A deals now appear to be inevitable

Elsewhere in the market, there are 33 other companies that Plimsoll has rated as “Strong” and a further 14 following them with a “Good” rating. With such polarisation and growing maturity in the market, there is fertile ground for a consolidation boom. As a result of this polarisation, the latest Plimsoll Analysis has rated 23 companies as being “Highly Attractive” M&A targets. Watch out for deals in 2023 and 2024.

Demand continues to grow but profits are falling

Year-on-year bank revenues are up over 40% after a 30% growth in the previous year. As blockchain becomes more mainstream and applications, including IoT or Web 3.0, demand has soared. But has profitability followed? Profits have fallen sharply in the latest year, falling just under 1% after being over 10% in the previous year. As the market matures, what represents a sustainable level of profit for such a disruptive market?

The latest Plimsoll Analysis is an invaluable resource for anyone with an interest in the long-term health and exposure of the blockchain sector. It separates the companies making healthy profits from those that are loss-making, those that are efficiently generating revenue from assets from those struggling to compete in 2023. It will also allow you to spot the best possible M&A targets across such a rapidly developing market.

Blockchain is changing the way business operates from supply chain to payment processing. Whether you are an executive, a regulator, an investor or just have a general interest in the blockchain sector, the Plimsoll Analysis provides a convenient assessment of the market including a financial health performance check on the top 200 innovators driving the market into the future.

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