The Bitcoin Holdings of Jack Dorsey’s Block Have Caused Loss of $36 Million

The Bitcoin Holdings of Jack Dorsey's Block Have Caused Loss of $36 Million

The digital payments startup Block Inc., which Jack Dorsey co-founded, announced a Bitcoin impairment loss of $36 million during the second quarter. The company ascribed the loss to “broader uncertainty about crypto assets.”

In a letter to its shareholders published on Thursday, Block disclosed that its Cash App, an online payments service that facilitates the purchase of cryptocurrencies, generated $1.79 billion in Bitcoin revenue and $41 million in Bitcoin gross profit. These figures represent 34 percent and 24 percent, respectively, compared to the previous year.

The company stated in its earnings report for the second quarter of 2022 that –

“The year-over-year decrease in Bitcoin revenue and gross profit was driven primarily by a decline in consumer demand and the price of Bitcoin, related in part to broader uncertainty around crypto assets,” which “more than offset the benefit of volatility in the price of Bitcoin during the quarter.”

However, when measured based on a compound annual growth rate (CAGR), Block’s Bitcoin revenue and gross profit increased by 143 percent and 168 percent, respectively, over three years.

Since Dorsey is an outspoken advocate for Bitcoin, the firm has made supporting the most popular cryptocurrency in the world one of its top priorities. Block, formerly known as Square, paid $220 million to acquire 8,027 bitcoins to maintain its balance sheet.

According to Block, as of the 30th of June in the year 2022, the reasonable worth of the company’s investment in Bitcoin was calculated to be $160 million based on the prices that could be observed on the market.

According to CoinMarketCap, the value of the most prominent cryptocurrency has decreased by more than fifty-one percent since the beginning of the year. It is presently trading for $23,190, which is an increase of over one percent over the previous twenty-four hours.

The company is also working on other facets of Bitcoin technology, such as making preparations to design a Bitcoin hardware wallet and forming a specialized team to construct mining rigs. These are just two examples.

The overall revenue for Block has decreased by 6%

The Cash App contributed almost 48 percent of the total gross profit that Block made during the second quarter, which came to a total of 1.47 billion dollars. The payments service now has 47 million active accounts, which is an increase from the 45 million active accounts it had in the first quarter.

The company’s total sales dropped by nearly 6 percent to reach $4.4 billion for the quarter, which was somewhat more than the forecasts of Wall Street, which were $4.3 billion. According to the study, overall net revenue rose to $2.62 billion, which is up 34 percent year over year. This figure does not include revenue from Bitcoin.

“While gross profit trends have been healthy through July, we recognize the importance of exercising discipline with our investments as we enter a period of potential uncertainty,” Amrita Ahuja, the chief financial officer of Block, said during an earnings conference call. “While entering a period of potential uncertainty, we recognize the importance of exercising discipline with our investments.”

Ahuja said that the corporation has slowed down the rate at which it was hiring new employees and would be cutting the amount of money it expected to invest in 2022 by $250 million.

The price of Block’s common stock dropped by about 6 percent during extended trading on Thursday, and it is currently trading down 6.63 percent in pre-market trading as this paragraph is being written.

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