Another setback for Bitcoin. After losing $ 20 million on its $ 220 million investment in bitcoin last quarter, Square will no longer buy cryptocurrency for its cash. This is what has been decided, for the moment, the payment company which runs the Cash App application, and which is headed by the founder and CEO of Twitter, Jack Dorsey, we learned in the “Financial Times ”this Friday.
“We have no plans at the moment to make further purchases,” Amrita Ahuja, Chief Financial Officer of Square, said in an interview with the British daily. While the purchase of bitcoin from the start-up’s cash represents around 5% of its cash, Amrita Ahuja clarified that there are still “many other opportunities for [Square] to learn with bitcoin ”.
The Elon Musk effect
The announcements come in the wake of Tesla boss Elon Musk’s about-face on Bitcoin, dropping its price by as much as 14% (below the key threshold of $ 50,000). Citing the huge environmental impact of cryptocurrency, he decided to stop accepting purchases made with Bitcoin for his electric car company.
A great defender of Bitcoin, Square remains cautious. Its general manager refers to an assessment based on “the evolution of the Bitcoin product or cryptographic products in general”. “Our position has always been that this is an area that needs innovation in terms of renewable energy and clean energy, and we want to be part of it,” Amrita Ahuja recalled.
Square’s bitcoin revenue surges in 2021
Square’s first-quarter revenue grew 266% year-over-year in March to $ 5.06 billion, thanks to a significant increase in bitcoin revenue from Cash App. This offers cryptocurrency trading to consumers. Square declared $ 3.5 billion in bitcoin revenue, 11 times what it did the year before.
However, Square only makes a small margin on each Bitcoin transaction, analyzes the “Financial Times”. The company’s gross bitcoin profit was only $ 75 million, or roughly 2% of the cryptocurrency’s revenue.