Fintech company Block, which is owned by Twitter founder Jack Dorsey, has reported significant Bitcoin revenue of $2.16 billion in the first quarter of 2023 across its Cash App product. The earnings announcement, contained in a shareholder letter, revealed that the Bitcoin revenue was up 18% from Q4 and 25% from Q1 2022. Cash App’s total profits reached over $931 million in the quarter, marking a 49% increase year-over-year. However, this profit was overshadowed by the company’s gross profit, which came in at $1.71 billion.
Block also owns the business payments service Square, which reported a slight 3.8% decline in profits from the fourth quarter of 2022. The company’s multi-billion-dollar Bitcoin revenues were driven by “an increase in the quantity of Bitcoin sold to customers,” although these revenues were “partially offset” by a decrease in the market price of Bitcoin compared to the same timeframe in 2022.
The earnings call for Block’s shareholders suggested that the company is looking ahead to the potential for disruptions in the global financial system, identifying artificial intelligence and open protocols as key technologies that could assist with such challenges. Jack Dorsey cited continued US bank failures and de-dollarization as the primary culprits for these shifts.
The release of Block’s earnings results had a positive effect on the firm’s share price, briefly pushing it up 5% to $63.50 in after-hours trading before settling back down to a gain of 2.5% at the time of publication. This is the first occasion of relief from a steady decline in Block’s share price, which fell by 25% following a scathing report by short sellers Hindenburg Research.
In March 2023, Hindenburg attacked Block, accusing the company of systematically taking advantage of the demographics it claimed to be helping. The report also accused Block of facilitating fraud against consumers and the government via its Cash App. Block responded to the allegations, calling Hindenburg known for issuing these types of attacks designed solely to allow short sellers to profit from a declined stock price. The company is confident that the allegations are inaccurate and designed to deceive investors.
Dorsey has been a consistent voice for cryptocurrency adoption, investing in Bitcoin personally and resurfacing his interest in developing new crypto technologies. In November 2022, he tweeted that he was planning to decentralize Square, the payments firm that Cash App is part of, in a move aimed at stepping back from control of the company. This news followed Dorsey’s decision to step down as CEO of Twitter in late 2021.
Block’s positive earnings report represents a significant success for the company, as it demonstrates the continuing growth, profitability, and potential of cryptocurrency. Dorsey’s confidence in the potential of cryptocurrency and his ongoing investment in the sector suggests that, despite challenges such as volatility and regulatory issues, it will maintain its position as a disruptive force in global finance.