Blockchain
Block to reinvest 10% of profits in Bitcoin each month
Last Updated: May 3, 2024 1:13am EDT | 1 minute read
Block, led by Jack Dorsey, has announced plans to allocate 10% of its profits Bitcoin products to buy more cryptocurrency every month, its quarterly report published Thursday showed.
Block was one of the first public companies to add Bitcoin to its holdings in 2020. With an initial investment of $220 million, its Bitcoin holdings increased 160% to $573 million by the end of the first quarter of 2024.
“We believe the world needs an open protocol for money, one that is not owned or controlled by a single entity,” company CEO Dorsey said in a letter to shareholders. He added that “bitcoin is the best and only candidate to be that protocol and, ultimately, become the native currency of the Internet.”
Block currently allocates less than 3% of its assets to Bitcoin projects, Dorsey said.
In the first quarter, the payments company’s gross profit grew 22% year over year to $2.09 billion. Net income quadrupled to $472 million, or 74 cents per share, compared to $98.3 million, or 16 cents per share, in the same quarter last year.
Meanwhile, Block raised its adjusted EBITDA forecast for the second quarter to $690 million from $670 million. The company also raised its annual adjusted core earnings guidance to at least $2.76 billion. This is up from the previous forecast of $2.63 billion.
These strong results and optimistic outlook sent the stock price up 5% to close Thursday at $70.30.
Cash App Fuels Block’s Growth, Facing Potential Regulatory Heat
Block’s mobile payment platform, Cash App, continued to be a source of profit. The unit generated gross profit of $1.26 billion, up 25% year over year.
However, the company faces a potential regulatory hurdle. Currently, Federal prosecutors are investigating alleged compliance issues at Square and Cash App.
These concerns reportedly center on the fact that Block may be failing to gather adequate customer information. The investigation is also examining transactions originating from sanctioned countries and enabling crypto transactions for terrorist groups.
One former employee said thousands of transactions went unreported, suggesting a significant challenge for Block in the coming months.
Block Unveils Advanced Bitcoin Mining System
Block recently has stepped up its Bitcoin mining efforts. We are moving from designing individual chips to developing a complete mining system.
The company has finalized the design of a cutting-edge 3-nanometer Bitcoin mining chip and is now working with a major semiconductor foundry to bring it to life.