NurPhoto and Bitcoin
Square's Cash App doubled its profit to $546 Million in the second quarter according to a shareholder letter dated Sunday.
It stated that the digital payments company suffered an impairment loss in excess of $45 Million on its bitcoin investments.
Due to relative stability in cryptocurrency's price, Bitcoin transactions revenue fell.
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Square reported that Cash App's net profit nearly doubled in the second quarter. However, it also suffered a $45million impairment loss on its bitcoin holdings. A financial update revealed this.
Square published a letter to shareholders late Sunday, saying that Cash App's mobile payments platform reported a quarterly gross profit of $546 Million in the three months ended June 30, representing a 94% increase year-on-year.
Square's quarterly earnings rose to $1.14 Billion, 91% more than the year before, thanks to this growth. Jack Dorsey is Twitter cofounder and Square CEO.
The digital payments company stated that it had suffered an impairment loss in $45 million from its bitcoin investment. This was on top of the $20 million bitcoin impairment in quarter 1.
Bitcoin's price has dropped 13% over the past three months, and is now down 37% from its peak in mid-April. According to Coinmarketcap, it was at $39,776 Monday at 1221 ET. This is due to China's recent clampdowns on cryptocurrency mining and purchases, as well as pushback by regulators at Binance crypto exchange.
Square allows customers to send bitcoin instantly and also purchases cryptocurrency for them. The company's total bitcoin sales are reflected in its bitcoin revenue.
The second quarter saw bitcoin revenue reach $2.72 trillion, which is three times higher than the previous year. According to the company, bitcoin gross profit amounted to only 2% revenue at $55 millions in the second quarter.
Square stated in a shareholder letter that "compared to the first quarter 2021, bitcoin revenues and gross profit decreased, primarily due to relative stability in bitcoin's price, which affected trading activities compared to previous quarters."