People are buying Bitcoin from Square’s Cash App. Square reported its revenue from Bitcoin sales amounted to $1.63B from its Cash App in the third quarter of 2020.
It represents a 1,100% increase from Q3 2019 revenues; it was also up from the second quarter of 2020 when Square scraped in $875B from the consumers the buy Bitcoin on the Cash App.
The letter says, “Bitcoin revenue and gross profit benefited from an increase in bitcoin actives and volume per customer.”
Bitcoin is a significant part of Cash App’s offerings, which also lets the users buy stock and auto-invest for the stocks or Bitcoin, even with sending and receiving cash.
Although it generates high revenues, Bitcoin isn’t the primary profit center. The $32M in gross profit from Bitcoin is a part of the $385M gross profit across Cash App.
The letter also explains why the company has pointed to $435M in revenue from the Cash App, which excluded the Bitcoin revenue:
“We deduct bitcoin revenue because our role is to facilitate customers’ access to bitcoin. “
When customers buy bitcoin through Cash App, we only apply a small margin to the market cost of bitcoin, which tends to be volatile and outside our control.”
Square CEO Jack Dorsey elaborated that the company believed that Bitcoin would be the “native currency of the internet.” It goes beyond making it available for purchase thru Cash App.
The company also held Bitcoins on its books. Last October, Square purchased 4,709 BTC worth $50M. That purchase can help explain why Square’s Bitcoin is now amounting to $72M.