Square Sees More Profits from Crypto but Tempers Expectations
Just a couple of months ago Square was celebrating their approval to sell Bitcoin in the state of New York. On the heels of that achievement, the company now reports that it saw profits from selling the cryptocurrency double in the second quarter of the year. However, despite Square CEO Jack Dorsey’s enthusiasm about the possibilities of crypto, the company itself is suggesting that they won’t be adding too much to their bottom line.
As CNBC reports, Square brought in a total of $37 million from Bitcoin in Q2, although the vast majority of those funds went toward fulfilling Bitcoin orders for users. Still the company managed to net $420,000 in profit from the trades. By comparison, the company saw $34 million in Bitcoin revenue during the first quarter, netting $200,000. Q1 2018 was the first quarter Square reported Bitcoin revenue after launching the feature late last year.
While the 100%+ increase is certainly impressive, the crypto profits play a relatively small role in Square’s diverse revenue streams (it brought in a total of $385 million in adjusted revenue for the quarter). Square CFO Sarah Friar noted as much, saying of Bitcoin, “It’s not a major monetization engine. The goal is to continue to drive utility in the Cash App.” Friar went on to explain how the company prevents crypto-related loses when prices change mid-transaction, saying, “We have some spread in there to allow for the fact that Bitcoin is volatile. We’re not trying to push on the monetization of Bitcoin today.”
Incidentally Square isn’t the only FinTech firm to tap cryptocurrency sales as a way to boost their other products. Earlier this year the free investment app Robinhood pulled a similar move, adding support for Bitcoin and Etherum trading. More recently, the app expanded their offerings to include Bitcoin Cash, Dogecoin, and Litecoin. Interestingly, while Robinhood doesn’t currently allow users to move their crypto to a separate wallet, Square’s Cash app does allow for external transfers.
Even if it’s not a big money-maker for the company just yet, Square’s success in the cryptocurrency space is still notable. In fact, as CCN recalls, CEO Jack Dorsey once spoke on cryptocurrency, saying, “We do believe that this is a transformational technology for our industry, and we want to learn as quickly as possible.” So while Bitcoin sales may currently be a tool for pushing adoption and usage of their Cash app, expect Square to make more moves into cryptocurrency down the road.