cryptovibes.com
The market analysis for the second quarter suggests that Jack Dorsey’s Square gained more than 90% in gross profit compared to the same period last year, with the firm generating $546 million from Cash App’s Bitcoin services.
In a second-quarter newsletter published on August 01, Square confirmed that it made impressive earnings, with its gross profit growing 91% to $1.14 billion.
The firm also revealed that its Bitcoin services generated revenue amounting to $2.72 billion for the app, with the firm making a gross profit of $55 million. Both revenue and gross profit made considerable gains, with an increase of 210% and 223% year on year respectively. Surprisingly, the Cash App generated a gross profit of $546 million overall, up 94% year to year.
“Bitcoin revenue and gross profit benefited from year-over-year increases in the price of Bitcoin and Bitcoin activities, and growth in customer demand.”
Nevertheless, while comparing this year’s first two quarters, Bitcoin revenues plunged by 22.3% from 3.5 billion. The Square holding policies reportedly attributed to the firm’s weaker performance following the broader crypto market crash in May and June.
The fintech company reported an impairment loss of $45 million on its Bitcoin holdings during the market crash period, unlike other notable investment companies like Tesla, which held their Bitcoin as an “intangible asset.”
But, the accounting rules need the firm to report an impairment loss only when the asset price drops below its cost basis. In that context, Square was not eligible to report any increases in the value of its intangible assets holdings until its position is realized through a sale.
According to Bitcoin Treasuries, Square currently holds 8,027 BTC worth an estimated $320 million at the time of this publication. Out of the total, Square bought 3,318 BTC in February at $170 million, adding to its initial purchase of 4,709 BTC in October 2021.
In a related report on July 30, Microstrategy pledged to buy more BTC despite reporting an impairment loss of $425 million on its Bitcoin stash for Q2. In the same context, Tesla reported an impairment loss amounting to $23 million for the second quarter.