Fintech giant Block, formerly known as Square Inc., posted impressive growth in bitcoin revenue during the first quarter of the year. According to the company’s shareholder letter, its Cash App unit reported $2.16 billion in bitcoin revenue, marking an 18% increase from Q4 and a 25% jump from Q1 2022. This revenue figure represents the total sale amount of bitcoin to customers.
While the rise in bitcoin revenue is a positive sign for the crypto market, some might see this dependence on cryptocurrency as a potential risk for the company. The unstable nature of digital assets could expose Block to market volatility in the future, leading to unpredictable fluctuations in revenue.
Despite the skepticism, the company continued to thrive in Q1. Cash App generated $50 million in bitcoin gross profit, which is a 43% increase from Q4 and a 16% YoY growth. Moreover, Block’s overall gross profit reached $770 million, up 16% year-over-year. The company’s success can be attributed to the recent surge in bitcoin prices, which allowed them to avoid booking an impairment loss on their bitcoin holdings during Q1. As a result, the company reported an impairment charge of $9 million in Q4 and an impairment of $47 million for the full year in 2022.
As of March 31, the fair value of Block’s bitcoin holdings stood at $229 million, while the carrying value came in at $126 million on the balance sheet. The original purchase price for these bitcoin holdings was $220 million. In terms of Q1 performance, the company reported $5 billion in revenue, beating estimates by $390 million. Furthermore, the non-GAAP EPS of $0.40 exceeded expectations by $0.06. Consequently, Block shares rose 2.4% after hours.
This report highlights Block’s growing presence in the cryptocurrency market, but also emphasizes the challenges it faces in navigating the rapidly evolving industry. As a leader in news and information on cryptocurrency, digital assets, and the future of money, CoinDesk strives to uphold the highest journalistic standards and abide by a strict set of editorial policies, ensuring transparent and trustworthy reporting on such developments.
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In conclusion, Block’s recent surge in bitcoin revenue showcases the promise and growth potential of digital currencies. However, investors and industry insiders must also consider the inherent risks and market volatility when evaluating the long-term prospects of companies with significant exposure to cryptocurrencies like Block.