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Square also said that due to fluctuations in client demand and BTC price, both Bitcoin revenue and gross profit may fluctuate in future quarters.
Payments firm Square Inc revealed in its third-quarter earnings letter Thursday that, Cash App, its mobile payments app recorded a 23% drop in quarterly profits generated by Bitcoin. The peer-to-peer payment app, however, generated $1.82 billion Bitcoin revenue in the quarter whiles gross profit on Bitcoin rose to $42, representing 11% and 29% year-over-year increases.
The payment firm’s total net revenue in the third quarter was $3.84 billion, up 27% year over year, while gross profit was $1.13 billion, up 43% year over year. During its third-quarter conference call, the firm revealed that a white paper on TBD, a new division focused on establishing an open developer platform to construct a decentralized bitcoin exchange, will be released on November 19.
According to Square, the drop-off in quarter-on-quarter Bitcoin revenue and gross profit was as a result of the “relative stability of the price of Bitcoin, which affected trading activity compared to prior quarters.” In comparison, bitcoin saw less volatility rate in Q3 as its trading price ranged from about $30,000 to $50,000 compared to Q2 when the price of the digital coin decreased from nearly $63,000 to about $31,000.
Square also said that due to fluctuations in client demand and bitcoin’s market price, both bitcoin revenue and gross profit may fluctuate in future quarters. “It said that may be particularly the case as we lap strong growth rates on a year-over-year basis in the fourth quarter of 2020,” the payment firm stated.
Despite the lower Bitcoin income, Cash App generated $2.39 billion in revenue and $512 million in gross profit in the third quarter of 2021, representing 16% and 33% increases, respectively. The app allows its users in the United States and the UK to buy Bitcoin and transfer money and BTC peer to peer and currently ranks second in finance apps installs on the U.S. Google Play Store according to AppBrain.
Cash App is now targeting the teen market, according to Square, after the company’s founder, Jack Dorsey, stated on Twitter that anyone 13 and older can now use the app’s peer-to-peer transaction functionality.
However, according to Jack Dorsey, they are now unable to use it to deposit checks or purchase Bitcoin. Experts believe that Bitcoin capability for teenagers would set it apart from other payment options, such as Apple Cash and Venmo, and potentially boost the company’s earnings.
Cash App made headlines earlier this week after NFL quarterback and reigning MVP, Aaron Rodgers stated that he was partnering with Cash App to accept a portion of his salary in Bitcoin. Experts believe bitcoin functionality for teenagers would set it apart from other payment methods, including Apple Cash and Venmo, and could help increase profits.