Square Inc., a payments company founded and run by Twitter CEO, posted $6 million in bitcoin-related impairment losses for the third 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 $66,000 in October but hovered around the $45,000 mark for a good while in the three months through September.
On a year-over-year basis, the San Francisco company said revenue made from selling bitcoin to its Cash App customers rose 11% to $1.81 billion. This figure is, however, lower QoQ when compared to $2.72 billion in Q2 2021 and a record $3.5 billion set back in the first quarter.
Gross profit from BTC transactions was up 29% year over year, coming in at $42 million during the third quarter of 2021, 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 $3.84 billion, up 27% year over year, and, excluding bitcoin revenue, the figure yielded $2.03 billion, up 45% for a year earlier.
Square made headlines earlier this year when it disclosed a significant bitcoin purchase of a little over $220 million. As of September 30, 2021, the fair value of its bitcoin holdings was $352 million based on current market prices, which marks $203 million in floating profits.
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.
