Bitcoin
Lock to reinvest 10% of profits into Bitcoin each month
Last updated: May 3, 2024 01:13 EDT | 1 minute reading
Block led by Jack Dorsey announced plans to allocate 10% of profits from its Bitcoin products to buy more cryptocurrency each month, your 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 reach $573 million by the end of the first quarter of 2024.
“We believe the world needs an open protocol for money that is not owned or controlled by any single entity,” said company CEO Dorsey 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 resources 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 with $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 profit guidance to at least $2.76 billion. This is up from the previous forecast of $2.63 billion.
These strong results and optimistic outlook caused the share price to rise 5%, closing at $70.30 on Thursday.
Cash App Fuels Block’s Growth, Faces Potential Regulatory Heat
Block’s mobile payment platform, Cash App, continued to be a moneymaker. The unit generated $1.26 billion in gross profit, a 25% increase year over year.
However, the company faces a potential regulatory hurdle. At the moment, Federal prosecutors are investigating alleged compliance issues in the Square and Cash app.
These concerns reportedly center on Block’s possible failure to collect adequate customer information. The investigation also analyzes transactions from sanctioned countries and allows crypto transactions for terrorist groups.
A former employee claimed that thousands of transactions went unreported, suggesting a significant challenge for Block in the coming months.
Block reveals advanced Bitcoin mining system
Block recently has stepped up its Bitcoin mining efforts. It is moving from designing individual chips to developing a complete mining system.
The company has finalized the design of a next-generation 3-nanometer Bitcoin mining chip and is now partnering with a major semiconductor foundry to bring it to life.