Square Inc., the Bitcoin payment app led by Jack Dorsey released its quarterly financial reports for shareholders on August 1st, reporting $4.68 Billion in total revenue in the second quarter of 2021. Square’s revenue grew 143% year-on-year (YoY). The firm mentioned it has seen a “significant growth in Bitcoin revenue,” estimated to be worth$2.72 Billion, seeing a 3X growth YoY.
The gross profit from Bitcoin however was only 2% of the total revenue at $55 million. The firm in its Q2 shareholder’s letter mentioned that the total Bitcoin revenue and gross profit declined in the second quarter in comparison to the first because of the price correction. The total Bitcoin revenue has fallen by 22.28% while the gross profit fell by 26.66% compared to the first quarter.
Square Reports $45 Million in Impairment Loss
The price of Bitcoin fell more than 50% in May from an ATH of $64,865 and currently trading just above $40,000. The massive price fall has led to impairment losses for several companies that hold Bitcoin on their balance sheet including Tesla, MicroStrategy, and Square. The Jack Dorsey-led firm reported $45 million in impairment losses in the second quarter on their Bitcoin investment. Square is still in $127 million profit on their Bitcoin investment.
“In the fourth quarter of 2020 and the first quarter of 2021, we invested $50 million and $170 million, respectively, in bitcoin. As an indefinite-lived intangible asset, bitcoin is subject to impairment losses if the fair value of bitcoin decreases below the carrying value during the assessed period. In the second quarter, we recognized a bitcoin impairment loss of $45 million on our bitcoin investment. As of June 30, 2021, the fair value of our investment in bitcoin was $281 million based on observable market prices, which is $127 million greater than the carrying value of the investment.”
Square has become a true Bitcoin product and now looks to expand its expertise from just being a payment solution provider. Dorsey over the month has confirmed that Square will be developing a hardware wallet of their own and most recently he revealed the company is working to build a Defi-like ecosystem on top of Bitcoin.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.