Square Inc., a payments company founded and run by Twitter CEO, Jack Dorsey, has reported a significant bitcoin revenue increase in the third quarter of 2020.
The San Francisco company said revenue made from selling bitcoin to its Cash App customers nearly doubled in Q3, coming in at a total of $1.63 billion compared to $875 million in the second quarter. This figure also marks an 1100% increase from the amount reported in the same period in 2019.
The company stresses it only takes a small margin selling bitcoin to customers on Cash App, Square’s popular payment service, but Q3’s results show it made $32 million in gross profit, which is up 15x year over year.
Overall, the company’s net revenue, including bitcoin revenue, was $3.03 billion, an increase of 140 percent year over year. Excluding crypto proceeds, total net revenue was $1.40 billion, up 25 percent year over year.
Square Makes Massive Bet on Bitcoin
“We deduct bitcoin revenue because our role is to facilitate customers’ access to bitcoin. When customers buy bitcoin through Cash App, we only apply a small margin to the market cost of bitcoin, which tends to be volatile and outside our control. Therefore, we believe deducting bitcoin revenue better reflects the economic benefits as well as our performance from these transactions,” the company explains.
Square made headlines last month when it made a significant purchase of a little over 4,700 bitcoins worth nearly $50 million. Having met financial obligations to shareholders, the company carried through with its plans to invest around one percent of its total assets at the end of Q2 of 2020.
Explaining the rationale behind this move, Square’s Chief Financial Officer, Amrita Ahuja said he believes that bitcoin has the potential to be “a more ubiquitous currency” in the future. Continuing, he argued that as the cryptocurrency grows in adoption, they intend to “learn and participate in a disciplined way. For a company that is building products based on a more inclusive future, this investment is a step on that journey.”
Ahuja also believes that bitcoin’s very structure will ensure that its value will only increase with time.
That angle closely mimics Square founder and CEO, Jack Dorsey, one of bitcoin’s foremost proponents who has repeatedly shared his enthusiasm for digital currencies, saying it provides an “opportunity to get more people access to the financial system.” He went further than most by calling bitcoin “a transformational technology” and it will be the world’s single currency in 10 years.