Block reports $36m Bitcoin impairment loss in second quarter
Bitcoin advocate Jack Dorsey’s payment firm blames fall in Bitcoin revenue as the primary driver behind its falling revenue
Block Inc, the digital payment firm co-founded by Twitter founder Jack Dorsey, has reported a $36m (£29.8m) second quarter impairment loss on its Bitcoin holding.
In a letter to shareholders, Block attributed the loss to “broader uncertainty around crypto assets”. Bitcoin, the world’s largest cryptocurrency, fell by 56% in the three months to the end of June, pushed down by a mixture of macroeconomic factors and calamities within the cryptocurrency sector.
The firm revealed that its Cash App service, which facilitates cryptocurrency purchases, generated $1.79bn of Bitcoin revenue and $41m of Bitcoin gross profit. This represented a year-on-year drop of 34% and 24%, respectively.
Bitcoin ‘key driver’ in falling revenue
The company stated: “The year-over-year decrease in Bitcoin revenue and gross profit was driven primarily by a decline in consumer demand and the price of Bitcoin, related in part to broader uncertainty around crypto assets, which more than offset the benefit of volatility in the price of Bitcoin during the quarter.”
Block identified the decrease in Bitcoin revenue as the main driver behind the 6% year-on-year fall in the company’s total net revenue to $4.4bn.
It said: “Excluding Bitcoin, total net revenue in the second quarter was $2.62bn, up 34% year over year. Gross profit was $1.47bn, up 29% year over year.”
Jack Dorsey is one of the most vocal and wealthy Bitcoin advocates in the world. As evidence of his bullishness, Block, formerly Square, became one of the first major corporations in the world to add Bitcoin to its balance sheet.
As of August 5, the value of the 8,027 bitcoin that Block acquired for $220m was $186m, a 15% fall.
Block shares were up by 1.3% at $90.95 at 10.45 (EDT) on Friday, a rise of 20.5% in the past five days.