Square's Cash App Q2 Bitcoin Revenue Rose 200%, Takes $45M Bitcoin Impairment Loss

Cash App's bitcoin gross profit rose to $55 million, Square said in its second-quarter letter to shareholders.

Aug 1, 2021 at 11:37 p.m. UTC
Updated Sep 14, 2021 at 1:33 p.m. UTC

Square, the company led by Twitter co-founder and CEO Jack Dorsey, said its Cash App service's bitcoin revenue in the second quarter tripled to $2.72 billion from $875 million a year earlier, while its bitcoin gross profit jumped to $55 million from $17 million.

  • Bitcoin revenue and gross profit benefited from year-over-year increases in the price of bitcoin and bitcoin activities and growth in customer demand, the payments services company said in its second-quarter financial letter to shareholders, which was released Sunday evening.
  • Bitcoin revenue and gross profit declined from the first quarter, mainly because of relative price stability, which affected trading activity compared with prior quarters.
  • Future quarters may see fluctuation in bitcoin revenue and gross profit as a result of changes in customer demand or market price, the letter says.
  • During the second quarter, Square recognized an impairment loss of $45 million on the bitcoin the company holds. Because bitcoin is accounted for as an indefinite-lived intangible asset, if the value of bitcoin falls below the carrying value, an impairment is required.
  • As of June 30, the fair value of the company's bitcoin investment was $281 million, $127 million greater than the carrying value. The company purchased its bitcoin for $50 million in last year's fourth quarter and $170 million in the first quarter.
  • Overall, the company posted second-quarters adjusted earnings of 66 cents per share, adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of $360 million and total revenue of $4.68 billion. The earnings per share and Ebitda were more than doubled analysts' estimates of 31 cents as $178 million, according to FactSet.
  • Separately, Square announced on Sunday that it agreed to buy Australian installment payment company Afterpay in an all-stock deal worth $29 billion based on Square's closing price on Friday.

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.