Block launches Bitcoin DCA plan, investing 10% of monthly gross profit into purchasing BTC

Twitter founder Jack Dorsey's payment platform Block, formerly known as Square, released its first quarter financial report for 2024. During the earnings call, Dorsey not only discussed the value and applications of Bitcoin, but also announced that starting from April, 10% of the monthly gross profit from Bitcoin products would be used to purchase Bitcoin. He also provided a detailed plan and execution method, encouraging everyone to participate.

Block Bitcoin Purchase Records

On October 7, 2020, Block purchased 4,709 bitcoins with a total purchase price of $50 million, at a cost of $10,618 per bitcoin.

In February 2021, they made another purchase of 3,318 bitcoins, totaling $170 million, at a cost of $51,236 per bitcoin.

As of March 31, 2024, Block holds 8,038 bitcoins on its balance sheet, accounting for approximately 9% of the company's total cash, cash equivalents, and marketable securities.

Trading Method

To maintain trading privacy and execute with minimal price slippage, Block purchases bitcoins through over-the-counter (OTC) trading with bitcoin liquidity providers, using negotiated spreads based on public bitcoin indices, and executes trades within a pre-scheduled 24-hour period using Time-Weighted Average Price (TWAP) to reduce risks associated with costs and pricing. Criteria evaluated when selecting liquidity providers include pricing, annual trading volume, and integration with Block's existing trading and settlement platforms.

DCA Plan

Following Square's launch of a bitcoin conversion product allowing sellers to automatically convert a portion of their sales into bitcoin holdings, Block announced a new Dollar Cost Averaging (DCA) plan for corporate balance sheets.

Faith in appreciation! Block: Square and Cash App merchants can convert 10% of revenue to bitcoin

Under this plan, Block will allocate 10% of monthly bitcoin product gross profit to purchasing bitcoins, starting from April 2024.

By distributing a portion of monthly bitcoin gross profit to bitcoin investments according to a predetermined cycle, it helps to mitigate the challenges of timing the market, as bitcoin prices are highly volatile and unpredictable, and its price movements are not always correlated with existing asset classes.

Crypto Insurance

Despite holding their bitcoin investments offline in cold storage, Block retains insurance policies to safeguard against internal or external theft of bitcoins in hot wallets and cold storage. There are various types of insurance available to prevent loss of cryptocurrencies, and it is crucial to assess the storage methods of digital assets and the insurance coverage provided before choosing a custodian.

Cryptocurrency Accounting Standards

Cryptocurrency accounting guidelines are continuously evolving. According to the AICPA's "Digital Assets Accounting and Audit Practice Aid," bitcoin will meet the definition of indefinite-lived intangible assets and will be accounted for under FASB ASC 350 "Intangibles – Goodwill and Other." In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update No. 2023-08, "Accounting for and Disclosure of Cryptographic Assets," changing the accounting treatment of bitcoins. With the adoption of the new guidance, bitcoins will be remeasured at fair value, and the changes will be recognized in net income.

In response to the new accounting standards, Block also recognized $2.334 billion in bitcoin gains in its first-quarter financial report.

Jack Dorsey discusses the vision of bitcoin, Block's financial report shines, and BTC profits increase by another $200 million.