Square Announces $50 Million Bitcoin Purchase
Square has just made a major investment in cryptocurrency. The Jack Dorsey-led FinTech announced this week that it had purchased 4,709 Bitcoins. With a total price tag of $50 million (which amounts to approximately 1% of Square’s total assets as of the end Q2), this means that the company paid around $10,600 per coin. News of the purchase sent the price of Bitcoin soaring, breaking through the $11,000 mark — where it remains as of this writing.
This investment is the latest escalation in Square’s Bitcoin romance. In 2018, the company began offering users of its Cash app the opportunity to purchase and sell the cryptocurrency. Since then, the feature has been extended to those in all 50 states.
Bitcoin has also been a growing part of Square’s business. In fact, in the second quarter of 2020, the Cash app generated $875 million in Bitcoin revenue — a 600% year-over-year increase — while gross profits from the Bitcoin sales were up 711% YOY with a total of $17 million during the quarter. Square is set to reveal its third quarter earnings on November 5th after market close.
It’s also notable is that, despite the growing number of alt-coins, Square CEO Jack Dorsey has repeatedly shown his loyalty to Bitcoin. Asked by a user on Twitter about the possibility of other cryptocurrencies coming to Cash, Dorsey declined, explaining his Bitcoin love by saying, “Bitcoin is resilient. Bitcoin is principled. Bitcoin is native to internet ideals. And it’s a great brand.”
In a press release announcing the investment, Square’s CFO Amrita Ahuja echoed some of Dorsey’s earlier sentiments, stating, “We believe that Bitcoin has the potential to be a more ubiquitous currency in the future.” Ahuja continued, “As it grows in adoption, we 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.”
Given the ups and downs that Bitcoin has seen in recent years, it’s encouraging that a mainstream but forward-thinking company like Square sees such value and potential in it. In turn, as we’ve seen with this recent price spike, Square’s current and future investments are able to boost Bitcoin in a way that few other FinTechs could. While crypto remains a modest part of Square’s business for now, this investment shows the long-term belief Dorsey and co. have in the technology. Plus, although Bitcoin transactions are mostly limited to the Cash app for now, it’s not hard to imagine that crypto integration within Square’s small business products could be a game-changer. Stay tuned.