Bitcoin has helped Square achieve a gross profit of $964 million in the first quarter of 2021 — a 79% increase year on year.
It’s fair to say that the payment firm’s results blew analyst expectations out of the water.
Total net revenue of $5.06 billion covering the period from January to March was 266% higher than the same period in 2020.
Of this, $3.51 billion in revenue came specifically from Bitcoin — 11 times more than the year before. However, it is worth noting that gross profit from crypto only came in at $75 million.
Square struck a cautious note in its letter to shareholders. While the company said the performance of its crypto service had benefited from BTC’s value and growth in customer demand, it added:
“In future quarters, we recognize that Bitcoin revenue may fluctuate as a result of changes in customer demand or the market price of Bitcoin.”
Hitting the Jackpot
Square also gave an update on the investment that it has made in Bitcoin.
The company has invested a total of $220 million into the cryptocurrency. It told shareholders:
“In the first quarter, we recognized a Bitcoin impairment loss of $20 million on our Bitcoin investment. As of March 31, 2021, the fair value of our investment in bitcoin was $472 million based on observable market prices, which is $272 million greater than the carrying value of the investment.”
Overall, this means that Square has generated some rather healthy paper profits from Bitcoin — an investment that it plans to hold for the long term.