Square Inc., a payments company founded and run by Twitter CEO, posted $45 million in bitcoin-related impairment losses as a result of the cryptocurrency’s massive crash in the second quarter.
The impairment loss reflects a decline in the carrying value of Square’s bitcoin holdings, but it can effectively be recouped if prices recover. Bitcoin was valued at more than $61,000 in April but crashed radically and hovered around the $30,000 mark for a good while.
On a year-over-year basis, the San Francisco company said revenue made from selling bitcoin to its Cash App customers nearly tripled in Q2 2021, coming in at a total of $2.72 billion. This figure is, however, lower 22 percent QoQ when compared to a record $3.5 billion set back in the first quarter.
Gross profit from BTC transactions also fell by 26 percent compared to the first quarter, the company said in a shareholder letter.
Square stresses it only takes a small margin selling bitcoin to customers on Cash App, its popular payment service.
Overall, the company’s net revenue, including bitcoin revenue, was $4.68 billion, an increase of 143 percent year over year.
MicroStrategy, Bitcoin’s largest corporate investor, also posted a $424.8 million impairment loss on its crypto investment for the Q2 2021, during which the cryptocurrency’s prices plummeted more 40 percent. But the intelligence firm’s CEO Michael Saylor said MicroStrategy is doubling down on its cryptocurrency bet and will continue to acquire additional bitcoins.
Square made headlines earlier this year when it disclosed a significant bitcoin purchase of a little over $220 million. Having met financial obligations to shareholders, the company carried through with its plans to invest around one percent of its total assets in the volatile asset.
Explaining the rationale behind this move, Square said it believes that bitcoin has the potential to be “a more ubiquitous currency” in the future. Continuing, the company argued that as the cryptocurrency grows in adoption, they intend to “learn and participate in a disciplined way. For a company that is building products based on a more inclusive future, this investment is a step on that journey.
That angle closely mimics Square founder and CEO, Jack Dorsey, one of bitcoin’s foremost proponents who has repeatedly shared his enthusiasm for digital currencies, saying it provides an “opportunity to get more people access to the financial system.” He went further than most by calling bitcoin “a transformational technology” and it will be the world’s single currency in 10 years.