Cash App set to expand user base following acquisition deal
The financial services and digital payments firm reported a Bitcoin revenue of $2.72 billion but netted a Bitcoin gross profit of $55 million
Square, led by Twitter CEO Jack Dorsey, reported on Saturday that it had gained $2.72 billion of revenue from Bitcoin in the second quarter of the year. The company published a letter confirming the increased growth and explained that it had seen a 3x increase in revenue in comparison with the same period last year.
The newly reported Q2 figures also represented a 26% decline in comparison with the revenue gained in Q1, but the year over year comparison reflects a 143% increase. Bitcoin contributed the largest share of the revenue, with $2.72 billion of the $4.68 billion generated in total revenue. In the first quarter of the year, Square had said that it made a $75 million profit, from $3.51 billion worth of Bitcoin revenues gained via its increasingly popular Cash App.
Further reviewing its performance in the markets as far as Bitcoin is concerned, the company, which has in recent months purchased billions of dollars worth of Bitcoin, said that it had made a $20 million loss on its investment in Q1.
“In the first quarter, we recognised a bitcoin impairment loss of $20 million on our bitcoin investment. As of March 31, 2021, the fair value of our investment in bitcoin was $472 million based on observable market prices, which is $272 million greater than the carrying value of the investment,” Square explained.
Square also revealed that it made a $45 million impairment loss on its Bitcoin investment in Q2, but the fair value of investment was $281 million at the end of June, which is $127 million greater than the carrying value of the investment.
The numbers Square reported reflect a 200% increase in the revenue gained from Bitcoin. The payments firm attributed the revenue increase that it saw in the quarter to the boost that the digital coin markets received earlier in the year.
Square also said that it had scheduled an acquisition of Afterpay, which will cost the company $29 billion. In the Sunday announcement, Square explained that the acquisition of the Australian-based Afterpay would help both companies increase the number of clients to whom they offer financial services.
“Afterpay will help deepen and reinforce the connections between our Cash App and Seller ecosystems and accelerate our ability to offer a rich suite of commerce capabilities to Cash App customers,” Square explained. The acquisition is scheduled for the first quarter of 2022.
Square has been keen on expanding its footing in the crypto game and early last month it confirmed plans to establish a Bitcoin hardware wallet with the intent of enhancing crypto services. The firm noted that the security advantages of a hardware wallet for Bitcoin would benefit its customers greatly.