Dorsey’s Block reported a Q2 profit of $1.47 billion, but only $41 million of it came from BTC trading services. The company attributed this to market volatility and a lack of consumer demand.
Block Inc., the digital payments company owned by former Twitter CEO Jack Dorsey, had year-over-year (YoY) profits jump 29% to $1.47 billion in Q2, but its Bitcoin business suffered due to weaker consumer demand and falling Bitcoin (BTC) prices.
The financial services company primarily earns money from Bitcoin by offering BTC trading services through its digital payments platform Cash App.
Dorsey’s Block reported that the company’s revenue from Bitcoin was $1.79 billion in the quarter, down 34% YoY, while Bitcoin gross profit was just $41 million, suggesting that offering Bitcoin services to clients may be a costly endeavor.
Block Inc. said that “broader uncertainty” in cryptocurrency assets was to blame for the decline in Bitcoin revenue, saying:
“The year-over-year decrease in Bitcoin revenue and gross profit was driven primarily by a decline in consumer demand and the price of bitcoin, related in part to broader uncertainty around crypto assets, which more than offset the benefit of volatility in the price of Bitcoin during the quarter.”
Block Inc. underlined that the decline in BTC profits does not, however, represent the company’s overall performance. Additionally, it stated that variations in “client demand or the market price of Bitcoin” will probably cause BTC revenues to alter over time.
The corporation also disclosed that it had an impairment loss of $36 million on its BTC assets, but this is probably merely a loss on paper.
Cryptocurrency is categorized as an intangible asset under U.S. accounting standards, and businesses are required to report a loss when the asset’s price falls below its cost basis, even if a gain or loss has been achieved through a sale during the particular quarter.
According to market prices, the corporation stated that as of June 30, 2022, the fair value of its investment in Bitcoin is $160 million.
Block Inc.’s Q2 results did not seem to excite investors, as evidenced by the company’s stock SQ’s decline of 7.42 percent in after-hours trading to reach $83 as of this writing.
According to Bloomberg, this was caused by the corporation reporting a lower-than-anticipated transaction volume of $52.5 billion as opposed to the anticipated $53.47 billion.
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