- The value of Bitcoin held by the company jumped from $220 million to $573 million.
- Dorsey opined that BTC was not a speculative asset like other cryptocurrencies, hence the decision to hold it.
Block, the financial technology company led by Jack Dorsey, had decided to use 10% of the profits from its bitcoin [BTC] Products to buy cryptocurrencies every month.
The company recently made this known in a statement to shareholders for the first quarter. Block began investing in Bitcoin in 2020. At the time, Dorsey made no secret of her love for the financial instrument.
Some of his posts, at the time, led users to label him a Bitcoin maximalist. However, it was not until 2020 that Block began launching Bitcoin-related products.
“3% is not enough”
Instead, in 2018 it became the first public company to add currency-related products. However, in the report, Block mentioned that only a small amount of resources were committed to Bitcoin products. The statement said,
“Less than 3% of the company’s resources are dedicated to Bitcoin-related projects. All of which has been more than completely covered by the profits from our bitcoin exchange, which is Cash App’s fourth largest source of gross profits.”
For context, Block owns CashApp and serves as a peer-to-peer payment system. The product has 21 million active users and since integrating it with Bitcoin, it has been able to improve global remittances.
Additionally, the report noted that Block’s Bitcoin investment has increased by 160%. In 2020, firm investment was $220 million. At the time of writing, the value has increased to $573 million.
Dorsey, who wrote the letter, explained that the growth he has experienced was one of the reasons he planned to dedicate 10% of his returns to investing in cryptocurrencies. He pointed out that,
“We also believe in investing in the overall asset of the ecosystem and holding bitcoins in our treasury. “In the future, every month we will invest 10% of our gross profit from bitcoin products in bitcoin purchases.”
As things stand, Block’s main investment would be in BTC. However, it was unclear if the team was considering adding other cryptocurrencies to its portfolio.
But this might seem unlikely, especially since Dorsey has barely shown his love for “just Bitcoin.” At press time, the price of Bitcoin was $64,142.
This was an increase of 118.87% in the last year. If the coin’s price reaches $73,000 again, Block’s Bitcoin holdings could exceed $600 million.
Block’s recent announcement reinforces the idea that many institutions could continue to embrace Bitcoin, and cryptocurrencies in general. First, Microstrategy, led by Michael Saylor, has doubled its Bitcoin holdings.
Tesla, which has Elon Musk as its boss, also revealed that it had not sold any of its BTC for some time. If these institutions continue to hold the currency, there is a high probability that prices will increase in the coming years.
Furthermore, this lends credence to the possibility that Block’s decision to purchase cryptocurrencies every month could generate good returns.
CashApp plays its role; the company aims at mining
Meanwhile, CashApp, Block’s main product, has been responsible for the revenue increase. According to the report, Block’s profits increased by 22% to $2.09 billion.
A breakdown showed that CashApp contributed $1.26 billion. Square, which is another Block Inc. company, generated $820 million in profits.
This was a 19% quarter-on-quarter (QoQ) increase. Furthermore, the financial statement revealed that,
“We achieved improvements in all profitability measures in the first quarter of 2024. Operating income was $250 million, while adjusted operating income was $364 million. Net income attributable to common shareholders was $472 million and adjusted EBITDA was $705 million, an increase of 91% year-over-year.”
If Block continues to generate this type of income consistently, there is a chance that the 10% dedicated to investment could increase.
Is your wallet green? Check the Bitcoin Profit Calculator
Aside from this investment, Block mentioned that he was working on designing chips for Bitcoin mining systems. In conclusion, the company noted that its goal of creating an open protocol for money might not allow it to consider other cryptocurrencies:
“Why Bitcoin versus all other “cryptocurrencies”? Satoshi designed Bitcoin to solve a very specific problem related to payments, which the world has since found immensely valuable. Most other projects solve different problems or try to be a speculative commercial asset.”
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This is an automatic translation of our English version.
