Jack Dorsey-led Block announced plans to allocate 10% of profits from its Bitcoin products toward buying more of the cryptocurrency each month, its quarterly report published Thursday showed.
Block was one of the first public companies to add Bitcoin to its holdings in 2020. With an initial investment of $220m, its Bitcoin holdings have surged 160% to hit $573m by the end of Q1 in 2024.
“We believe the world needs an open protocol for money, one that’s not owned or controlled by any single entity,” CEO Dorsey company said in a letter to shareholders. He added that “bitcoin is the best and only candidate to be that protocol, and to ultimately become the native currency of the internet.”
Block currently allocates less than 3% of its resources to Bitcoin projects, Dorsey said.
In the first quarter, the payments firm’s gross profit grew 22% year-over-year to $2.09b. Net income quadrupled to $472m, or 74 cents per share, compared to $98.3m or 16 cents per share in the same quarter last year.
Meanwhile, Block raised its adjusted EBITDA forecast for the second quarter to $690m from $670m. The company also raised its annual adjusted core earnings guidance to at least $2.76b. This is up from its previous forecast of $2.63b.
These strong results and optimistic outlook sent the stock price 5% higher to close at $70.30 on Thursday.
Cash App Fuels Block’s Growth, Faces Potential Regulatory Heat
Block’s mobile payment platform, Cash App, continued to be a profit powerhouse. The unit generated $1.26b in gross profit, a 25% increase year-over-year.
However, the company faces a potential regulatory hurdle. Currently, federal prosecutors are investigating alleged compliance issues at Square and Cash App.
These concerns reportedly center on Block potentially failing to collect adequate customer information. The investigation is also looking at transactions from sanctioned countries and enabling crypto transactions for terrorist groups.
A former employee has claimed that thousands of transactions went unreported, suggesting a significant challenge for Block in the coming months.
Block Unveils Advanced Bitcoin Mining System
Block recently ramped up its Bitcoin mining efforts. It is transitioning from designing individual chips to developing a complete mining system.
The company finalized the design of a cutting-edge 3 nanometer Bitcoin mining chip and is now partnering with a major semiconductor foundry to bring it to life.
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