Fact Check: Square Reports Bitcoin As Revenue And It’s 58 Percent Of Total. Photo by: STRF/STAR MAX/IPx 2021 6/6/21 Square logo photographed off an iphone SE 2020.
Billionaire tech entrepreneur Jack Dorsey has long been bullish on bitcoin. His hedge was right, so it would seem. Dorsey’s financial payments firm Square reported earning $2.72 billion in bitcoin revenue in the second quarter of 2021. It said it generated the earnings through its peer-to-peer mobile payment service Cash App. Cash App’s bitcoin service equals approximately 58 percent of Square’s total Q2 net revenue, which is $4.68 billion, Investing.com reported.
While this amount is not near the massive $3.5 billion the company reported in the first quarter of the year, it represents a 143-percent year-over-year increase in revenue. The continued revenue for the first half of 2021 adds up to $6.22 billion.
Dorsey, the CEO of Twitter and Square, accomplished this crypto feat even as bitcoin share prices fell by more than 40 percent.
Many still consider bitcoin to be unpredictable, but Cash App users can use the platform to purchase bitcoin.
Square customers’ bitcoin balance is stored using Square’s secure online/offline wallet system. Square holds the Bitcoin as a custodian at customer’s risk, according to Squareup.com.
Dorsey has been a big promoter of using bitcoin. In October 2020, Square put 1 percent of its total assets in bitcoin with a $50 million investment equaling 4,709 bitcoins.
“We view bitcoin as an instrument of global economic empowerment,” the company said in its bitcoin investment whitepaper. “It is a way for individuals around the world to participate in a global monetary system and secure their own financial future. This investment is an important step in furthering our mission.”
By all accounts, Dorsey has committed to bitcoin in the long term.
In 2018, Dorsey permitted bitcoin to be traded on Cash App, and in March 2019 he launched Square Crypto.
Square’s bitcoin gross profit in Q2 2021 was $55 million, a 26-percent drop in comparison with the $75 million reported in Q1. Meanwhile, the firm reported an impairment loss of $45 million on its bitcoin portfolio due to the massive slump in Q2, Investing.com reported.
Not everyone was impressed by Square’s bitcoin news.
Dr. Parik Patel tweeted, “if you know anything about how Square reports revenues you know that this is a meaningless statement”. Patel publishes the economic newsletter The Macro Mail.
Others questioned how Square calculated its revenue, accusing the company of pumping its numbers.
“I fear for earnings quality and financial statements quality. This is absolute rubbish,” tweeted MyCFO*Everything is about numbers* @Temilade.
Subtracttionz @littletimmyguy tweeted, “Square investor here. I don’t like how they calculate that ‘revenue’. It’s a strat just pump their numbers imo”.
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?
