Block Reports Healthy Profit for Q2, Although Bitcoin Business Falls Behind
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Block Inc., the payment processing giant led by Twitter founder Jack Dorsey, recently posted its financial results. The results indicate another quarter of gains for the crypto-focused company, although the lag of its Bitcoin business is becoming a concerning trend.
Concerns for Bitcoin Despite Strong Overall Performance
Earlier this week, Block shared its financial results for the year’s second quarter. According to the report, the company’s year-on-year (YoY) profits are strong, jumping by 29% to hit a value of $1.47 billion in the quarter. This is despite the company reporting $52.5 billion in transaction volumes – lower than Wall Street estimates of $5,347 billion.
Cash App, Block’s popular retail and social payment platform, accounted for roughly 48% of all gross profits coming into the company. As Block’s report showed, Cash App now has 47 million active accounts – an impressive jump from 45 million in the year’s first quarter.
While Block’s results were skewed towards a positive performance, the company admitted to taking some losses in its Bitcoin business. Total revenue from Bitcoin in the second quarter stood at $1.79 billion, down by 34% year-on-year and much less than the $3.5 billion generated in the first quarter of 2022. Also, Block could only generate $41 million in Bitcoin profits.
As for Block’s Bitcoin investment, the company pointed out that its holdings in the leading crypto asset had dropped to about $160 million as of June 30, 2022. This slump is not surprising, considering the market’s performance over the past few months.
Despite the slowdown in its Bitcoin business, Block has confirmed that it still holds a positive future outlook. It blamed the decrease in its BTC revenue on the fall in the asset’s price as well as growing uncertainty and wavering investor confidence in the market. While Block believes that Bitcoin profits would still rise, the company also pointed out that it expects further volatility in short to medium terms.
Shake Ups for Institutional Bitcoin Whales
Block is one of the largest institutions that invest in Bitcoin. However, among the biggest Bitcoin whales, it appears to be the most stable in its belief in the asset.
In its quarterly report for Q2, electric vehicle manufacturer Tesla announced that it had offloaded 75% of its Bitcoin holdings. The company revealed the sales of the asset for $936 million, leaving it with only $218 million worth of the asset at press time.
Although Tesla failed to disclose why it chose to sell Bitcoin, its board might have grown wary of the market underperformance. Tesla’s stock dipping by 23.6% also means that the company will be scrambling to hold cash as it works towards expansion. Selling Bitcoin seems the easiest way to achieve a positive cash flow.
Also, a shakeup is expected from MicroStrategy. The Virginia-based business intelligence firm recently announced that CEO Michael Saylor, who pushed it to accept the Bitcoin standard and invest over $4 billion in the digital asset, would step down.
Saylor would now transition into a new role as MicroStrategy’s Executive Chairman – a role which, according to him, would allow him better focus on the company’s Bitcoin-holding strategy. Although MicroStrategy has not made any comments about dumping Bitcoin, it is not far-fetched that the company might unwind some of its positions down the line – especially now that Saylor is out.
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