Block, maker of the Cash App, recorded an increase in revenue from sales of bitcoin of $660.8 million in the third quarter, according to a regulatory filing Thursday.
The 37% increase over the company’s second quarter results reflects its customer’s appetite for buying bitcoin, even though the asset’s price fell by 11% during that period. These results have not yet accounted for the price surge experienced in October.
Total bitcoin revenue was reported to be $2.42 billion in the third quarter, up from $1.76 billion in the same period last year. After deducting costs of acquiring that bitcoin on behalf of customers, profit from sales came in around $45 million, similar to Block’s reported second quarter results.
“The increase in the three months ended Sept. 30, 2023 was driven by an increase in both the average market price of bitcoin and the quantity of bitcoin sold to customers compared to the three months ended Sept. 30, 2022,” Block stated.
Bitcoin (BTC) finished September about 30% higher than its price to close out September 2022.
Block, formerly known as Square, launched bitcoin trading on Cash App in 2018. Block currently provides custody services for all 25,083 bitcoins, valued at around $858 million at time of publication, held on behalf of its customers.
In 2023, it ceased lending any bitcoin and is not making use of any third-party custodians, the filing said.
“The Company does not use any of the bitcoin custodied for customers or trading partners as collateral for any of the Company’s loans or other financing arrangements; nor does it lend or pledge bitcoin held for others to any third parties,” it said.
The company’s gross profit from its bitcoin trading services represent just 5% of Cash App gross profit, and 3% of the company’s total gross profit in 2023. This is equal to its gross profit figures for the first three quarters of 2022.
Bitcoin on Block’s balance sheet
Bitcoin’s price rise naturally means that for the third consecutive quarter, Block recorded no impairment losses on its bitcoin held for investment.
The company’s bitcoin investment is susceptible to impairment losses whenever the fair value of bitcoin falls below its carrying value within a quarter. These losses persist until the bitcoin is sold. Previously, the company recorded impairment charges amounting to $117.7 million.
Block’s investment holdings of BTC remain roughly unchanged, and the company reports a cumulative total of $220 million in bitcoin as of the close of the third quarter. That aligns with its reported fair value of $216.5 million.
However, the price of bitcoin has rallied about 27% since then, which puts Block well in the green on a fair value basis.
“We believe cryptocurrency is an instrument of economic empowerment that aligns with our corporate purpose,” the company said.
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