Jack Dorsey’s Cash App posts $2.16 billion in Bitcoin revenue for the first quarter of 2023
Thanks to an increase in the amount of Bitcoin sold to its customers, Block’s Cash app generated $50 million in Bitcoin gross profit in the first quarter of 2023, up 16% year over year, the company said in a shareholder letter Thursday.
The total sales amount of Bitcoin sold to customers, which Block said it recognizes as Bitcoin revenue, was $2.16 billion, up 25% year over year.
In its previous earnings report, Block reported $1.83 billion in Bitcoin revenue from its Cash App business.
According to the company, “the year-over-year increase in Bitcoin revenue and gross profit was driven by an increase in the amount of Bitcoin sold to customers, partially offset by a decrease in the market price of Bitcoin compared to the year-ago period.”
Block, formerly known as Square, is a payments company founded by Twitter co-founder Jack Dorsey. It serves small and medium-sized businesses, with its mobile payment service Cash App being a popular tool for buying and selling Bitcoin, especially for younger users and those who prefer to conduct financial transactions on their mobile devices.
With Cash App, users can link their bank accounts, credit cards or debit cards to their account and use the app to send or receive payments from other users. Cash App also offers a number of other features, including the ability to invest in stocks, and a debit card that allows users to use their Cash App balance at retailers and withdraw cash from ATMs.
In October 2022, Block announced full support for the Lightning Network, Bitcoin’s second layer scalability solution that enables users to perform fast and affordable off-chain transactions while still enjoying the security and trustlessness of the network.
No impairment loss on Bitcoin holdings, says Block
In its latest earnings report, the company also revealed that it did not have an impairment loss on its Bitcoin holdings in Q1 after investing a total of $220 million in the leading cryptocurrency in the fourth quarter of 2020 and the first quarter of 2021. At the time, Block bought Bitcoin worth 50 and 170 million dollars.
As explained by Block, Bitcoin as an intangible asset with an indefinite life is subject to impairment if its fair value falls below book value during the considered period.
As of March 31, 2023, the fair value of the company’s investment in Bitcoin was $229 million, or “$126 million higher than the carrying amount of the investment after cumulative write-downs.”
“Bitcoin accounting rules currently require us to recognize any reductions in market price below book value as an impairment charge, with no upside recognized when the market price increases prior to the sale of that Bitcoin,” the company said, adding that it is revaluing its Bitcoin holdings at daily basis using the closing rate at midnight Coordinated Universal Time (UTC).
Block’s ( SQ ) shares traded hands at $60.43 at the closing bell Thursday, up 1.87% on the day, and jumped nearly 5% to $63.35 in Friday premarket trading.
