Block Inc., a digital payments company owned by former Twitter CEO Jack Dorsey, posted a 29% YoY profit increase to $1.47 billion in the second quarter.
The financial services company generates Bitcoin revenue primarily by providing BTC trading services through its digital payment application, Cash App.
Block Inc. noted that the company generated $1.79 billion in bitcoin revenue for the quarter, down 34% year-over-year, while gross profit from bitcoin was just $41 million, which was suggesting that offering Bitcoin services to its customers could be a costly endeavor.
Block Inc. said the decline in Bitcoin earnings was due to “greater uncertainty” in crypto assets, stating:
“The year-over-year decline in bitcoin revenue and gross profit was primarily due to a decline in consumer demand and the bitcoin price, which was partly due to broader uncertainty surrounding crypto assets, taking advantage of price volatility more as Bitcoin equalized during the quarter.”
However, Block Inc. emphasized that the BTC earnings slump does not reflect the company’s overall performance. It also pointed out that BTC gains are likely to fluctuate over time due to “changes in customer demand or the market price of Bitcoin.”
The company also noted that it recorded a $36 million impairment loss on its BTC holdings, but this is likely just a paper loss.
Under U.S. GAAP, crypto is classified as an intangible asset on balance sheets, and companies are required to report a loss if the asset’s price falls below its cost, even if a gain or loss was realized on a sale during the quarter.
The Company determined that the fair value of its investment in Bitcoin as of June 30, 2022 based on market prices is $160 million.
Related: Interview With Kevin O’Leary: $28,000 Bitcoin Next Or Lower? | Market talks with Crypto Jebb
However, investors appear unfazed by Block Inc.’s second-quarter performance, as the company’s stock SQ is down 7.42% in after-hours trading to $83 at the time of writing.
Bloomberg suggested that this was because the company reported a lower-than-expected transaction volume of $52.5 billion, versus the estimated $53.47 billion.
Bitcoin from the block
Dorsey, the ardent bitcoin maxi, has been relatively quiet about his digital gold plans since announcing in June that Block Inc. was bypassing the Web3 model to build the bitcoin blockchain-focused Web5 project.
Web5 is essentially a decentralized web platform or DWP that allows developers to build decentralized web apps via DIDs and decentralized nodes that will also have a monetary network built around BTC and not smart contract-backed tokenization.
no pic.twitter.com/RTHLWYjY0L
— Jack (@jack) June 16, 2022
Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers
Comments are closed.