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Square Records 11-fold Growth in Bitcoin Revenue Year-over-Year

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by Ibukun Ogundare · 3 min read
Square Records 11-fold Growth in Bitcoin Revenue Year-over-Year
Photo: Square

According to Square, the Bitcoin revenue represents an 11X gain year-on-year.

American financial services and mobile payment company Square Inc (NYSE: SQ) has revealed that its Cash App generated $3.51 billion of Bitcoin revenue in the first quarter of the year. Square announced its massive increase in a shareholder letter published on the 7th of May.

Square Secures $3.51 Billion in Bitcoin Revenue

According to Square, the Bitcoin revenue represents an 11X gain year-on-year. The payment company said in the shareholder letter:

“Cash App generated $3.51 billion of bitcoin revenue and $75 million of bitcoin gross profit during the first quarter of 2021, each up approximately 11x year over year.”

In 2020 Q1, Square said its Bitcoin revenue for the quarter was $306 million.

Apart from being an 11-folds rise compared with this time last year, the Bitcoin revenue also represents double of the $1.76 billion Square reported in 2020 Q4.

As stated in the shareholder letter, Square’s total revenue for 2021 Q1 was $5.06 billion. This shows that bitcoin revenue for Square accounted for 70% of the company’s total consolidated revenue for the quarter.

Square’s Bitcoin Investment

Square has a portion of its treasury in Bitcoin. The company invested $50 million in the last quarter 0f 2020 and topped it with an additional $170 million in 2021 Q1. According to Square, the plan is to hold the BTC investment for a long term.

However, Square recorded a $20 million impairment loss on its Bitcoin holdings as a result of the fluctuation in market prices. Square wrote:

“As of March 31, 2021, the fair value of our investment in Bitcoin was $472 million based on observable market prices, which is $272 million greater than the carrying value of the investment.”

In the shareholder letter, Square highlighted the other financial results for the first quarter. The company said its transaction-based revenue was $960 million during the period. The transaction-based revenue represented a 27% gain year over year. Also, Square said that its transaction-based gross profit was about $435 million, up 49% year over year.

Square’s investment in Bitcoin is not the first time a public company would be investing in Bitcoin. MicroStrategy Incorporated (NASDAQ: MSTR) started its Bitcoin investment in August 2020 and has continually purchased more of the king coin since then. Like Square, MicroStrategy said the BTC investment is part of its primary treasury reserve. Microstrategy is the first publicly-traded company to invest hugely in Bitcoin and now holds more than 90,000 Bitcoins.

Square stock is currently up over 2% to $228.64 at after-hours trading. The company’s shares have gained over 200% over the past year and improved by 2.90% in its year-to-date record. At the same time, Square stock has been declining over the past few months. The payments company’s shares have dropped nearly 6% in the last three months. Also, SQ has fallen more than 13% over the past month and decreased further by 9.61% in the last five days.

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