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Block, the payments firm led by CEO Jack Dorsey, has begun a dollar cost averaging (DCA) program to expand its Bitcoin holdings, per a May 2 shareholder letter.
Starting in April, the company has been allocating 10% of its monthly gross profit from Bitcoin-related products to purchase additional Bitcoin. The strategy is set to continue throughout the remainder of 2024.
Dollar-cost averaging is an investment strategy that involves investing a fixed dollar amount into a particular asset at regular intervals, irrespective of the asset’s price at the time. The method is commonly used to mitigate the effects of price volatility.
The move by Block, Inc. follows the increased acceptance of Bitcoin as a mainstream investment option, highlighted by the Securities and Exchange Commission’s approval of several Bitcoin exchange-traded funds in January. This growing mainstream recognition mirrors the company’s commitment to investing in Bitcoin.
“We believe the world needs an open protocol for money, one that’s not owned or controlled by any single entity…Our investment in Bitcoin transcends technology; it is an investment in a future where economic empowerment is the norm.” Jack Dorsey said in the note.
Despite the increased focus on Bitcoin, Dorsey noted that less than 3% of Block’s resources are currently dedicated to Bitcoin-related projects. However, the company has updated its earnings expectations, forecasting annual adjusted core earnings of at least $2.76 billion, an increase from the previously projected $2.63 billion.
The shift to a Bitcoin-centric portfolio isn’t new for Block. The company first made headlines in October 2020 when it purchased 4,709 BTC at an average price of $10,618 per Bitcoin.
Subsequent investments in February 2021 included the addition of 3,318 BTC at a significantly greater price of $51,236 each.
As of March 31, 2024, Block reported owning 8,038 BTC valued at $573 million, with paper gains amounting to $233 million.
However, despite these gains, Block’s shares have declined by 9% this year, with additional pressures following reports that Federal prosecutors are investigating the company’s internal compliance structures and its handling of transactions involving sanctioned countries.