Jack Dorsey’s co-founded digital payments business, Block Inc., revealed a $36 million loss on the devaluation of its Bitcoin holdings in the second quarter, which it ascribed to “broader uncertainty about crypto assets.”
Block stated in a shareholder letter on Thursday that its Cash App, an online payment system that enables bitcoin purchases, produced $1.79 billion in Bitcoin sales and $41 million in Bitcoin gross profit, down 34% and 24%, respectively, from the prior year.
According to the company’s Q2 2022 earnings report,
“The year-over-year decrease in Bitcoin revenue and gross profit was primarily driven 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.”
But on a three-year CAGR basis, Block’s income from Bitcoin and gross profit increased by 143 percent and 168 percent, respectively.
The company’s top goal under Dorsey, a strong proponent of the biggest cryptocurrency in the world, is Bitcoin. For $220 million, Block, formerly known as Square, purchased 8,027 Bitcoin to retain on its financial statement.
According to Block, based on current market pricing as of June 30, 2022, the company’s investment in Bitcoin was $160 million.
The most valuable cryptocurrency is presently trading at $23,439, up about 1% over the past 24 hours, according to CoinMarketCap, having lost more than 51% of its value since the year began.
The business is also working on other facets of Bitcoin technology, such as creating a team for building mining rigs and developing a hardware wallet.
Block’s overall income decreased by 6%
Block’s second-quarter gross profit was $1.47 billion, with Cash App contributing around 48% of that total. The number of active accounts for the payments service has increased to 47 million from 45 million in the first quarter.
For the quarter, the company’s total sales decreased by nearly 6% to $4.4 billion, slightly exceeding Wall Street’s forecast of $4.3 billion. According to the study, overall net revenue, excluding Bitcoin income, was $2.62 billion, up 34% from the previous year.
In a conference call to discuss earnings, Block’s chief financial officer Amrita Ahuja remarked, “While gross profit trends have been strong through July, we acknowledge the significance of exercising discipline with our investments as we enter a period of potential volatility.”
Ahuja added that the business has paused hiring and would cut its projected expenditures by $250 million for 2022.