Digital payments startup Square made more than $34 million in revenue in the first quarter from cryptocurrency purchases.
In a 10-Q filing submitted to the U.S. Securities and Exchange Commission, Square declared its financial results for Q1 2018, noting that roughly 5 percent of its revenue came from customers purchasing bitcoin through its Cash app. Due to the costs of purchasing the cryptocurrency, the company’s total profit in the time period is about $223,000.
According to the filing:
“For the three months ended March 31, 2018, the revenue recognized from contracts with customers was $648.8 million, including $34.1 million from bitcoin sales. Revenue from other sources was $19.8 million. Impairment losses arising from contracts with customers were not significant in the current reporting period.”
However, the cryptocurrency-based revenue is offset by the $33.9 million it cost to purchase the bitcoin in the first place, according to the filing. Square defines its bitcoin costs as “the amounts we pay to purchase bitcoin in the public cryptocurrency exchanges or from customers. The amount of bitcoin costs will fluctuate in line with the associated revenue.”
Square first enabled bitcoin buying through the Cash app last November as part of a pilot program open to a limited number of users. At the time users were unable to make bitcoin payments using the app.
The company changed this policy in late January, when it gave users the ability to send payments to friends and family members. Bitcoin payments also expanded to almost all U.S. customers, with the exception of those in New York, Georgia, Hawaii and Wyoming – all being states with tougher regulations around cryptocurrencies.
Bitcoins and dollar image via Shutterstock