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Square reports $1.63 billion in bitcoin sales for the third quarter via its Cash App

Square reports $1.63 billion in bitcoin sales for the third quarter via its Cash App

Square sold $1.63 billion in bitcoin during the third quarter of 2020, according to a newly released earnings statement.

As The Block reported at the time, Square made $875 million in bitcoin sales revenue and posted $17 million of bitcoin gross profit. For Q3, Square made $32 million in gross profit on its bitcoin sales.

“Bitcoin revenue and gross profit benefited from an increase in bitcoin actives and volume per customer,” the firm said in its report.

Square made headlines last month when it announced the purchase of $50 million in bitcoin. At the time, the payment firm said that “cryptocurrency is an instrument of economic empowerment and provides a way to participate in a global monetary system, which aligns with the company’s purpose.” The investment represented roughly 1% of Square’s total assets as of 2020’s second quarter, as reported at the time. 

Square said of that purchase in its Q3 report:

“In October 2020, we invested $50 million in bitcoin as we believe cryptocurrencies are an instrument of economic empowerment and aligns with the company’s purpose. We expect to hold this investment for the long term. The accounting rules for bitcoin will require us to recognize any decreases in market price below cost as an impairment charge, with no upward revisions when the market price increases until a sale.”

As The Block’s Ryan Todd wrote in a recent column, bitcoin sales to date have only formed a negligible — but still growing — amount to Square’s gross profit base.

“Through the first 10 quarters of selling bitcoin through the Cash App, the company has now sold more than $4 billion dollars worth of bitcoin. And yet, the net impact of selling bitcoin has only contributed a total of $34.1 million in net income to date when backing out the cost of acquiring the asset. In the second quarter of 2020, the $17 million in net income from the sale of bitcoin represented only 2.84% of total firm gross profit,” he wrote. 

Square reported overall gross profits of $794 million for the third quarter. Cash App, according to the report, generated a total of $385 million in gross profits.

“Cash App saw increased engagement as customers adopted multiple products: In the third quarter of 2020, the number of average daily transacting active Cash App customers nearly doubled from the same period last year,” the firm said.

This story is developing. 

© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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Author: Michael McSweeney