Dorsey's Block to invest 10% of bitcoin profits into BTC each month, shares rise on Q1 earnings beat
Quick Take
- Block will be investing 10% of its gross profit from bitcoin products into bitcoin purchases on a monthly basis.
- The company reported a top- and bottom-line first-quarter earnings beat.
Block (SQ) shares were trading higher in the after-hours session Thursday following first-quarter earnings that beat analysts' expectations.
Adjusted earnings of 85 cents per share bested the consensus estimate by 13 cents, while revenue of $5.97 billion topped Wall Street's $5.82-billion projection. Gross profit grew 22% from last year's first quarter to $2.09 billion.
Notably, the Jack Dorsey-led company also announced it will begin adding more bitcoin to its balance sheet and is open-sourcing its treasury blueprint so others can follow suit.
Block, formerly known as Square, said it will invest 10% of its gross profit from bitcoin products into bitcoin purchases each month. The company also said its original bitcoin investment of $220 million has grown by approximately 160% to $573 million.
"We believe the world needs an open protocol for money, one that’s not owned or controlled by any single entity. We believe bitcoin is the best and only candidate to be that protocol, and to ultimately become the native currency of the internet," wrote Dorsey in the letter.
The company's Cash App unit saw gross profit growth of 25% year-over-year in the first quarter, driven primarily by inflows per active and monetization rate, with strong performance across Cash App Card, BNPL platform, Bitcoin products, and Cash App Borrow.
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The total sale amount of bitcoin sold to customers, which it recognizes as bitcoin revenue, was $2.73 billion and had a gross profit of $80 million in the first quarter, the company said.
Block announced on April 23 that it has finished developing a three-nanometer Bitcoin mining chip. This moves the company closer to its goal of supporting decentralized mining, which will include offering standalone mining chips and mining systems.
Block is reportedly dealing with the authorities over non-compliant crypto services. Federal prosecutors are scrutinizing Block’s crypto unit, working with whistleblowers to investigate the company's compliance practices, sources familiar with the matter told NBC News earlier this week.
Block's stock was trading higher after hours by 7.6% to $75.68 at publication time. The stock closed the regular session at $70.30, good for a 5.17% gain. Shares are down about 2.6% in the year-to-date period.
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