Bitcoin Transactions Boost Square’s Quarterly Profit by Almost 60 Percent

Square reported a nearly 60 percent rise in third-quarter gross profit on Thursday, fueled by a jump in Bitcoin transactions on its peer-to-peer payment service Cash App.

The payments firm, which is acquiring buy now, pay later pioneer Afterpay for $29 billion (roughly Rs. 2,15,282 crore), posted gross profit of $1.13 billion (roughly Rs. 8,388 crore) in the quarter ended September 30.

Cash App generated $1.82 billion (roughly Rs. 13,509 crore) in Bitcoin revenue, up 11 percent from a year earlier.

But San Francisco-based Square said Bitcoin revenue and gross profit decreased from the previous quarter as relative stability in the cryptocurrency’s price drove down trading activity. Bitcoin price in India as of November 5 at 6:02pm IST stood at Rs. 49.22 lakh.

The company, led by Twitter top boss Jack Dorsey, has benefited in the past year from a pandemic-driven jump in demand for e-commerce from people staying at home.

Its gross payment volumes, a measure of the transactions processed on Cash App, rose 27 percent to $3.7 billion (roughly Rs. 27,464 crore). Total net revenue jumped 27 percent to $3.84 billion (roughly Rs. 28,503 crore).

Dorsey has been an extremely vocal supporter of Bitcoin and cryptocurrencies. A recent Bitcoin rally had reportedly doubled Square’ investment of $220 million (roughly Rs. 1,650 crore) to over $470 million (roughly Rs. 3,526 crores) when the world’s oldest cryptocurrency was trading at around $62,000 (roughly Rs 46.52 lakhs).

According to a report in Bitcoin Magazine, Square holds nearly 8,027 Bitcoins, acquired at an aggregate purchase price of $220 million and an average price per Bitcoin of $27,407 (Rs. 20.56 lakhs), inclusive of fees and expenses.

Square first announced it had purchased 4,709 Bitcoins at an aggregate purchase price of $50 million (roughly Rs. 375 crores) in October 2020. In the full-year 2020 report, the company said it had purchased approximately 3,318 Bitcoins at an aggregate purchase price of $170 million (roughly Rs. 1,275 crores). Of the other companies — MicroStrategy and Tesla — whose Bitcoin investments recently doubled, Square has acquired its Bitcoin for the lowest average price per coin, the report said.

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