Sq. posts $45 million in bitcoin-related impairments in Q2

Jack Dorsey, Co-Founder and CEO of Twitter Inc. and Square Inc., speaks during the Bitcoin 2021 conference in Miami, Florida, USA, on Friday, June 4th, 2021.

Eva Marie Uzcategui | Bloomberg | Getty Images

Square’s bitcoin-related investments had a $ 45 million operating income charge in the second quarter, the company said late Sunday, more than double its first-quarter depreciation.

Square, a digital payments company, announced in February that it had purchased $ 170 million worth of Bitcoin and expanded its purchase in October 2020. That was roughly 5% of the company’s total assets at the end of 2020. Square’s disclosure came in its earnings report on Sunday, released earlier than planned, at the same time as the company announced that it would buy Australian financial technology company Afterpay for $ 29 Billion deal.

Businesses are increasingly leaning towards Bitcoin as it becomes more mainstream. But a rough second quarter for the world’s largest digital coin means inventory would be worth much less than at the end of the first quarter. Bitcoin’s price peaked above $ 63,000 in April and then fell below $ 30,000 in early July. Bitcoin was trading at just over $ 39,000 on Monday morning.

Tesla, for example, saw $ 23 million in Bitcoin-related impairment last quarter, the company said in its Q2 earnings report late last month.

Square said it still saw “significant year-over-year growth in Bitcoin revenue” last quarter. Bitcoin sales were $ 2.72 billion, up roughly three times over the previous year. At the same time, Bitcoin gross profit was $ 55 million, or about 2% of Bitcoin sales.

Meanwhile, gross profit rose 91% year over year, representing a record rate of growth for the quarter. Net sales excluding bitcoin were $ 1.96 billion for the quarter, up 87% year over year.

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