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Square saw Cash App's gross profit almost double in the second quarter, but also logged a $45 million impairment loss on its bitcoin holdings, a financial update showed.
Mobile payments platform Cash App reported quarterly gross profit of $546 million in the three months to June 30, a 94% year-on-year rise, Square said in a shareholder letter published late Sunday.
The growth helped lift overall quarterly earnings at Square, whose CEO is Twitter co-founder Jack Dorsey, to $1.14 billion, a 91% increase on the previous year.
On the downside, though, the digital payments company said it had booked an impairment loss of $45 million on its investment in bitcoin, on the heels of a $20 million bitcoin impairment in the first quarter.
The price of bitcoin has fallen 13% in the three months to June 30, and it is down 37% since its mid-April peak. It stood at $39,776 as of Monday at 1221 ET, according to Coinmarketcap. The slide is due to China's recent clampdown on activities such as cryptocurrency purchases and crypto mining, while pushback from regulators on crypto exchange Binance has also unsettled buyers.
Square offers the ability to instantly send bitcoin, and it purchases the cryptocurrency so that customers can easily access it. Its bitcoin revenue reflects the total amount of sales of the coin the company has had.
In the second quarter, bitcoin revenue came in at $2.72 billion, three times more than in the same period a year earlier. Bitcoin gross profit added up to only 2% of revenue at $55 million in the period, the company said.
"Compared to the first quarter of 2021, bitcoin revenue and gross profit decreased on a quarter-over-quarter basis, driven primarily by relative stability in the price of bitcoin, which affected trading activity compared to prior quarters," Square wrote in the shareholder letter.
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