Square generates $42m in Q3 bitcoin profit

Jack Dorsey’s Square reported $1.3bn in gross profit earnings in Q3, up 43% from last year

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Square, the payments company owned by Twitter CEO Jack Dorsey, generated $1.3bn (£964m, €1.1bn) in gross profit in the third quarter of 2021, an increase of 43% from a year earlier.

The company posted its third-quarter earnings report on Thursday showing a total net revenue of $3.84bn in Q3, up 27% year-on-year.

However, while bitcoin transactions have steadily grown through its Cash App over the last few years, its overall bitcoin gross profit fell in the third quarter to $42m, compared with $55m that was generated through the app in Q2.

Fluctuation in markets reflect Bitcoin earnings

Cryptocurrencies aside, Square’s Cash App delivered strong growth in the third quarter of 2021, generating $2.39bn of revenue and $512m of gross profit, which increased 16% and 33% year-on-year.

Looking at its year-on year figures, Square’s overall bitcoin revenue is up – Cash App generated $1.82bn of bitcoin revenue and $42m of bitcoin gross profit during the third quarter of 2021, up 11% and 29% year-on-year. However, the San-Francisco based firm said that the fall in its bitcoin revenue from the last quarter was due to market instability and decrease in trading volumes.

Square also anticipates that its bitcoin earnings may continue to fluctuate in future quarters due to changing consumer demands and market changes.

“As an indefinite-lived intangible asset, bitcoin is subject to impairment losses if the fair value of bitcoin decreases below the carrying value during the assessed period. In the third quarter, we recognised a bitcoin impairment loss of $6m on our bitcoin investment,” said Square.

“As of September 30, 2021, the fair value of our investment in bitcoin was $352m based on observable market prices, which is $203m greater than the carrying value of the investment.”

Strengthening its seller and merchant network

Square has focused on building its seller and merchant services over the past few years in a bid to challenge traditional payments merchants and point-of-sale solutions. It follows its recent acquisition of Australian payments start-up Afterpay to move into the buy now, pay later sector as consumers continue to rely on flexible payment methods. 

It reported that its seller ecosystem generated $1.39bn of revenue and $606m of gross profit, up 44% and 48% on a year-on-year basis. It also recorded strong growth in card-present volumes on a year-over-year basis as in-person activity has resumed. 

Square will also continue its global expansion into new territories in order to provide merchants with omnichannel products, achieve product parity and build brand awareness.

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Further reading: Jack Dorsey’s Square is ”considering“ building a crypto mining system

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