Square Inc., chaired and led by its CEO Jack Dorsey, has disclosed that it no longer has any upcoming plans of purchasing Bitcoin ($BTC) for its balance sheet.
“We don’t have any plans at this point to make further purchases,” shared Square CFO Amrita Ahuja in an interview.
As of this year’s first quarter, Square has invested some $220 million on the alpha cryptocurrency, with two separate purchases in October 2020 for $50 million, and in February this year for another $170 million. The company has since lost $20 million in BTC value after Bitcoin regressed to the $50,000 level this week.
Square, alongside Tesla and MicroStrategy, are among the top tech companies who have come out as proponents of holding Bitcoin as a hedge against economic inflation.
Square’s buy in on Bitcoin was seen as a positive indication of the cryptocurrency’s growth and dominance. As the price indications of Bitcoin have turned to a bearish market, this latest disclosure from Square offers a significant outlook.
The disclosure follows statements from Tesla’s Elon Musk, who recently announced that his company will no longer be accepting Bitcoin as a form of payment for Tesla’s electric vehicles. Musk cited the environmental impact of Bitcoin mining and cryptocurrency transactions as a factor in the decision. Musk shared statistics on the matter after the statement.
In relation, Square expressed concerns regarding the supply chain issues that surround the crypto and blockchain industry’s production aspects.
“Our position has always been that this is an area that needs innovation in terms of renewables and clean energy, and we want to be a part of that,” Ahuja relayed. “There’s a broader supply chain question around how renewables and clean energy become a greater part of the blockchain in general, and a greater part of the overall mining and transaction network...It’s the overall fixed footprint of the network that we need to address.” she added.
Square’s payments services has expanded over the years, since its inception in 2009 by Dorsey and Jim McKelvey. The financial technology firm introduced Cash App in 2013. Cash App allows users to buy Bitcoin directly through a user’s fiat balance.
As of the first quarter of 2021, Cash App has reported over 36 million monthly active users. Square’s market capitalization is valued at over $100 billion, according to 2020 estimates.
“We’re always evaluating and as ever, I think we’d be customer-led,” Ahuja stated. “As we see the evolution of the bitcoin product or crypto products in general, I think we’ll make further assessments at that point.” the executive hypothesized.
In a joint report titled Bitcoin is Key to an Abundant, Clean Energy Future published in collaboration with ARK Invest, Square stated that “A world with bitcoin is a world that, at equilibrium, generates more electricity from renewable carbon-free sources.” The report was published in April, 2021. ARK Invest’s crypto-related investment portfolio includes crypto exchange Coinbase and Tesla.
According to Square’s earnings report filed to the U.S. Securities and Exchange commission, the firm generated $4.57 billion of revenue in 2020 from its Bitcoin offerings through Cash App. Square’s Bitcoin earnings made up 48% of its total consolidated revenue in 2020, and 85% of its total increase in consolidated net revenues for 2020. However, only 10% (or about 3 million) of Cash App users bought Bitcoin, according to Ahuja.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.