Digital payments company Block Inc saw former Twitter CEO Jack Dorsey increase its year-over-year profit 29% to $1.47 billion in the second quarter, despite its Bitcoin (BTCBusiness slumped due to lower customer demand and lower bitcoin prices.
The financial services company primarily generates Bitcoin revenue by providing BTC trading services via the Digital Payments Cash App.
Block Inc. has noticed. That the business generated $1.79 billion in Bitcoin revenue in the quarter, down 34% year over year, while Bitcoin’s total profit was just $41 million, indicating that it may be a high-cost venture to provide Bitcoin services to its customers.
Block Inc. said. The decline in Bitcoin revenue was attributed to “wider uncertainty” in crypto assets, noting:
“The annual decline in Bitcoin revenue and gross profit was primarily driven by lower consumer demand and the price of Bitcoin, partly related to broader uncertainty around crypto assets, which more than offset the volatility advantage of Bitcoin during the quarter.”
However, Block Inc. That BTC earnings decline does not reflect the company’s broader performance. He also noted that BTC earnings are likely to fluctuate over time as a result of “changes in customer demand or the market price of bitcoin.”
The company also indicated that it admitted an impairment loss of $36 million on its BTC holdings. However, this is likely to be just a loss on paper.
Under US accounting procedures, crypto is classified as an intangible asset on balance sheets and companies must report a loss when the price of the asset is lower than the cost basiseven if a gain or loss is realized through a sale during the specified quarter.
The company indicated that as of June 30, 2022, the fair value of its investments in Bitcoin is $160 million based on market prices.
Investors seem unimpressed by Block Inc.’s performance. In the second quarter, company SQ stock is down 7.42% in after-hours trading to stay at $83 at the time of writing.
Bloomberg noted that this is because the company reported lower-than-expected transaction volumes of $52.5 billion, such as opposing to an estimated $53.47 billion.
Bitcoin from the block
Dorsey, the powerful Bitcoin maxi, has been relatively quiet about his plans for digital gold since he announced that Block Inc. It was going beyond the Web3 model to build Web5 project focused on Bitcoin blockchain in June.
Web5 is a decentralized web platform, or DWP, that allows developers to create decentralized web applications via DIDs and decentralized nodes, which will also have a cash network built around BTC and not a smart token backed by nodes.
– Jack (@jack) June 16, 2022
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