Bitcoin Revenue Boosts Block Inc. to $2.6 Billion: Market Sentiment

[TL; DR]

Block Inc., the payment giant led by Jack Dorsey, reported a notable 9% year-over-year increase in Bitcoin revenue for the second quarter of 2024, reaching $2.61 billion.

In a recent shareholder letter, Block detailed that its total net revenue for the quarter hit $6.16 billion, marking an 11% rise from the same period in 2023.

When excluding Bitcoin revenue, the company’s revenue was $3.54 billion, reflecting a 13% annual growth.

Block calculates Bitcoin revenue as the total value of BTC sold to its customers.

Cash App, Block’s flagship service, contributed $4.13 billion to the quarterly revenue. Without Bitcoin transactions, Cash App’s revenue stood at $1.52 billion. The app also saw a significant increase in Bitcoin gross profit, which surged by 52% year-over-year to $67 million in Q2 2024.

Read also: Bitcoin Price Predictions for 2024-2030

Block and the BTC Saga

The increase in Bitcoin gross profit was largely attributed to a higher average BTC price, which has soared over 45% in 2024, trading at $64,777 at the time of the report. However, Block reported a $70 million loss from its Bitcoin holdings, with approximately 8,211 BTC valued at $515 million on the balance sheet as of June 30, 2024. The company added around 173 BTC during the quarter.

Block’s overall gross profit grew by 20% from the previous year, totaling $2.23 billion. Net income attributable to common shareholders was $195 million, nearly doubling from $102 million in the same quarter last year.

In a move to bolster its financial standing, Block announced in May its intention to raise $2 billion through senior unsecured notes for qualified institutional investors. The company stated that, with the proceeds from this debt offering, it ended the second quarter of 2024 with $10.3 billion in available liquidity.

The funds from the debt offering are earmarked for a variety of purposes, including debt repayment, acquisitions, strategic transactions, capital expenditures, investments, and working capital.

Dorsey’s Plans on BTC

Block Inc., led by Jack Dorsey, has outlined plans to significantly increase its Bitcoin holdings throughout 2024. The company has implemented a Bitcoin dollar-cost averaging (DCA) purchase program, which commits 10% of the gross profit from its Bitcoin-related products to acquiring additional Bitcoin each month. This strategic decision aligns with Block’s belief in Bitcoin as a tool for economic empowerment, allowing individuals to participate in a global financial and control their financial futures independently.

This initiative, which began in April 2024, will continue through the year, ensuring that Block atically increases its Bitcoin reserves regardless of market conditions. This approach reflects Block’s long-term confidence in Bitcoin’s potential as a transformative asset​.

Block’s commitment to Bitcoin is further reflected in its comprehensive strategy for managing its Bitcoin holdings. This includes detailed plans for purchase ution, storage mechanics, and insurance and accounting considerations, ensuring that the company’s investment in Bitcoin is well-protected and strategically managed. This initiative not only supports Block’s financial goals but also underscores its long-term confidence in the potential of Bitcoin​.

Other Companies with BTC Holdings

Several notable companies are actively purchasing Bitcoin to hold as part of their corporate reserves. Here are some of the major ones:

MicroStrategy: Leading the way, MicroStrategy holds the largest amount of Bitcoin among publicly traded companies. As of now, they own approximately 158,400 BTC. The company, under the leadership of Michael Saylor, has been a strong advocate for Bitcoin, viewing it as a strategic asset and continuously increasing its holdings through various capital-raising initiatives​.

Marathon Digital Holdings: This U.S.-based cryptocurrency mining firm holds about 13,726 BTC. Marathon Digital has been expanding its mining operations and reserves, making it one of the largest Bitcoin holders among mining companies.

Tesla: The electric vehicle and clean energy company led by Elon Musk holds around 10,500 BTC. Although Tesla has had a fluctuating relationship with Bitcoin, it remains one of the significant corporate holders of the cryptocurrency​.

Hut 8 Mining Corp: This Canadian Bitcoin mining company has about 9,255 BTC. Hut 8 has focused on growing its Bitcoin holdings through its mining operations and strategic acquisitions​.

Riot Platforms, Inc.: Another major player in the Bitcoin mining industry, Riot Platforms (formerly Riot Blockchain), holds around 9,084 BTC. The company has invested heavily in expanding its mining capacity in the U.S.

Galaxy Digital Holdings: This cryptocurrency-focused merchant bank holds about 8,100 BTC. Founded by Michael Novogratz, Galaxy Digital has been a significant player in the cryptocurrency investment space​.

These companies view Bitcoin as a strategic asset, contributing to their financial reserves and leveraging its potential for long-term value appreciation.

How Does This Affect BTC Price

The substantial accumulation of Bitcoin by major companies can have several impacts on the price of Bitcoin:

1-Increased Demand: When companies like MicroStrategy, Tesla, and Block Inc. purchase large amounts of Bitcoin, they significantly increase the demand for the cryptocurrency. Since Bitcoin has a capped supply of 21 million coins, higher demand typically drives up the price. The more Bitcoin these companies buy, the more scarcity is created in the market, which can lead to higher prices.

2-Market Sentiment: Large purchases by well-known corporations can positively influence market sentiment. Investors often view these actions as endorsements of Bitcoin’s value and legitimacy. This can attract more institutional and retail investors, further boosting demand and price. When a company like MicroStrategy makes a high-profile investment, it can signal confidence in Bitcoin’s future, encouraging others to follow suit​.

3.Reduced Volatility: Over time, as more institutions hold Bitcoin, the market may become less volatile. Institutional investors tend to hold assets longer than retail investors, reducing the frequency and impact of large sell-offs. This increased stability can make Bitcoin more attractive to other potential investors, possibly leading to further price increases.

4.Market Liquidity: While large-scale acquisitions can temporarily reduce liquidity (making fewer Bitcoins available for trading), they can also enhance overall market liquidity as institutions often trade in a more structured and predictable manner. This can make the market deeper and more resilient to shocks, potentially stabilizing prices over the long term​.

5.Network Effects: As more companies integrate Bitcoin into their balance sheets and operations, the network effect comes into play. More usage and acceptance can lead to broader adoption, reinforcing Bitcoin’s value proposition as a global digital currency. This widespread adoption can drive the price higher due to increased usage across various platforms and services.

6.Regulatory Influence: The involvement of large corporations in Bitcoin could attract regulatory scrutiny, potentially leading to clearer regulations. While this can initially cause uncertainty and volatility, clear regulatory frameworks can provide legitimacy and security for institutional investors, encouraging further investments and potentially increasing Bitcoin’s price.

Overall, the activity of large-scale corporate purchases is generally bullish for Bitcoin’s price, as it underscores confidence in its future value and utility, attracts more investors, and can lead to increased adoption and stability in the cryptocurrency market.

FAQs

What is Jack Dorsey doing with Bitcoin?

Dorsey tends to stay quiet.

Even when he speaks, he’s soft spoken, but he’s put a lot into Bitcoin. Most recently, he’s pledged $21 million to its open source development. And he’s invested in Bitcoin startups, such as Lightning Labs.

How much does Block make from Bitcoin?

Block, maker of the Cash App, recorded an increase in revenue from sales of bitcoin of $660.8 million in the third quarter of 2023

How much bitcoin does Block own?

Block, Inc. owns 8,027 BTC

Is Block buying Bitcoin?

Block intends to buy bitcoin monthly, beginning in April 2024, utilizing Time-Weighted Average Price (TWAP) orders. To minimize slippage, the company said it will buy BTC “over a two-hour window that has historically had the greatest amount of liquidity.”