- Fintech provider Block made 51% less revenue with bitcoin in the first quarter of 2022 compared to Q1 last year
- Block blamed its lagging bitcoin revenue on the cryptocurrency’s sideways price movement
Jack Dorsey’s fintech company Block says more than 10 million Cash App accounts have bought bitcoin since 2018.
“We are focused on expanding our customers’ awareness and access to bitcoin, which has allowed us to drive meaningful adoption,” the company, formerly known as Square, wrote in its first quarter earnings report Thursday.
Block’s earnings were relatively healthy, although it had little to do with bitcoin. The San Francisco-headquartered firm generated $1.29 billion of gross profit, up 34% year over year.
Block’s peer-to-peer money platform, Cash App, contributed $624 million to the bottom line. The app and its point-of-sale devices allow users to accept payment in fiat and bitcoin, charging a 3% fee.
Cash App integrated the layer-2 bitcoin scaling solution Lightning Network earlier this year to speed up transactions via the service. Payments settled via Lightning are free.
Cash App made $1.7 billion of bitcoin revenue for Block last quarter, down a pearl-clutching 51% year over year. Gross profit fell 42% to $43 million, about 3% of Cash App’s bitcoin revenue.
After excluding bitcoin and its recently acquired buy-now-pay-later service Afterpay, Cash App revenue rose 26% year over year to $667 million.
Block said falling bitcoin revenue and gross profit were the result of the top cryptocurrency’s sideways price action, “which affected consumer demand and trading activity compared to the prior year period.”
The suggestion is that it’s not bitcoin volatility that inspires users to interact with the cryptocurrency via Cash App, but rather sustained upwards movement.
Bitcoin started the year trading around $47,000 and ended the quarter around the same. But it was still volatile, bouncing between that mark and $37,000 multiple times throughout the quarter.
Block highlighted that on a two-year compound annual growth rate basis, its bitcoin revenue and gross profit actually grew 138% and 155%, respectively.
“Bitcoin revenue and gross profit were relatively consistent compared to the fourth quarter of 2021,” Block told shareholders. “In future quarters, bitcoin revenue and gross profit may fluctuate as a result of changes in customer demand or the market price of bitcoin.”
The company said it had seen “growing momentum” around its new bitcoin saving service that debuted in April. It allows US users with activated Cash Cards to receive parts of recurring paycheck deposits in BTC with no transaction fee. No specific data was provided.
Block also confirmed it sold none of its enormous bitcoin stash last quarter and recorded no impairment loss. Dorsey’s firm currently holds 8,027 BTC ($290.3 million), which it acquired in two lots across late 2020 and early 2021.
Block spent $220 million on its bitcoin treasury, the fourth largest stash for a public company behind Marathon Digital, Tesla and MicroStrategy.
This means Block is still in the green some $70 million on its bitcoin purchases – even after the recent monster dip.
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