Revenue nearly doubles! Square's Bitcoin sales revenue reached $1.63 billion in the third quarter.

According to the latest earnings report, Square sold $1.63 billion worth of Bitcoin through Cash App in the third quarter of 2020. Compared to the previous quarter, the Bitcoin sales business brought in revenue growth of nearly 90% for the company.

Square Releases Q3 Shareholder Letter

In the shareholder letter for the third quarter of 2020 released by Square, the company reported that its platform Cash App generated $1.63 billion in Bitcoin revenue during Q3, resulting in a net profit of $32 million after deducting the cost of purchasing Bitcoin. Square attributed the significant growth in Bitcoin sales performance to the market activity and user growth of Bitcoin as an investment asset:

"In Q3 2020, Cash App generated $1.63 billion in Bitcoin revenue, with a gross profit of approximately $32 million, representing year-over-year growth of approximately 11x and 15x, respectively. The growth in Bitcoin revenue and gross profit was driven by the increased market activity and customer base of Bitcoin."

In addition to its Bitcoin sales business, Square also announced last month that it allocated 1% of its corporate reserves (approximately $50 million) to invest in Bitcoin. The company mentioned this acquisition in its Q3 report:

"In October 2020, we invested $50 million in Bitcoin because we believe cryptocurrency is an instrument of economic empowerment and aligns with the company's purpose. We intend to hold this investment for the long term."

Steady Growth in Bitcoin Business Profit

Despite the continuous growth in Square's Bitcoin sales business, the revenue generated from Bitcoin sales still accounts for a relatively small portion of the company's total revenue. Researcher Ryan Todd from The Block pointed out in a research report released on October 8:

"In the first ten quarters of Cash App's Bitcoin sales business, the company has sold over $1 billion worth of Bitcoin. However, as of Q2 2020, the total net profit from selling Bitcoin amounted to $34.1 million, with the net profit from Bitcoin sales in the second quarter alone at $17 million, accounting for only 2.84% of the company's total gross profit. (All data excludes the third quarter.)"

However, it is worth noting that the net profit from Bitcoin sales in the third quarter has increased to 4% of the company's total profit.

Although this percentage may not be high, maintaining a steady rate of growth is still promising for future performance.