Decrease in Bitcoin profits
Financial services provider Block (formerly Square) announced its financial results for the fourth quarter of 2022 (October to December) on the 24th. Bitcoin (BTC) gross profits from financial app Cash App reportedly fell 25% year-on-year.
Block Inc. considers the total amount of bitcoin sold to app users as its bitcoin revenue, which was about 247 billion yen ($1.83 billion) in 4Q, down 7% year-on-year. In addition, about 4.7 billion yen ($35 million), which is 2% of this total revenue, was profit.
For the full year of 2022, Cash App’s bitcoin revenue is about 960 billion yen ($7.11 billion), 29% year-on-year. Bitcoin gross profit was about 21 billion yen ($156 million), down 28% year-on-year.
Block explained that the decline in bitcoin revenue and profits was due to a “falling bitcoin price.”
Block’s overall gross profit increased by 40% year-on-year to about 224 billion yen ($1.66 billion). In particular, Cash App, an app that allows remittance and stock trading, has a gross profit of about 11.4 billion yen ($848 million), a 64% increase from the previous year. Cash App has reached 51 million monthly active users.
What is Cash App
A payment service developed by Block (formerly Square) that allows users to transfer money between users using a mobile app. It provides banking functions for sending, receiving, and storing funds, bitcoin trading, and stock trading.
Bitcoin Asset Situation
Block is also known to have purchased Bitcoin as a financial asset, and has also explained the status of this asset. As of December 31, 2022, the fair value of the company’s bitcoin was reported to be approximately ?17.5 billion (approximately $130 million) based on market prices.
In the 4Q of 2022, we recorded an impairment loss of approximately 1.2 billion yen (approximately $9 million) on bitcoin assets. For the full year of 2022, there was an impairment loss of approximately 6.3 billion yen (approximately 47 million dollars).
Currently, according to accounting rules in the United States, Bitcoin is treated as an intangible asset with an indefinite useful life, and the market price is the book value (generally recorded at the amount at the time of acquisition and reassessed at the time of settlement). Any further decline is to be recorded as an impairment loss. On the other hand, if the market price rises, the book value cannot be revised upward except when the bitcoin is sold.
Block bought Bitcoin for the first time in 2020 and has made additional purchases since then. In 2020 and 2021, it has invested about ?29.6 billion ($220 million) in Bitcoin in total.
connection: Willy Woo, importance seen from Square’s Bitcoin purchase worth 5.3 billion yen
Bitcoin-related movement
In 2022, Block launched Round Ups, a feature that automatically makes small investments whenever you shop on Cash App. Users can choose to invest in stocks, ETFs, or bitcoins.
In another bitcoin-related move, Max Guise, the company’s bitcoin wallet head, said in January that he was developing a digital wallet that would allow users to store their own bitcoin (BTC). said.
It is a mechanism in which funds cannot be transferred from the wallet unless the user operates the device, and users will be able to choose whether to operate the smartphone alone with the application or to operate the hardware in addition to the smartphone.
This is partly because the bankrupt FTX misappropriated customer funds. Guise said that with user-managed wallets, that doesn’t happen.
US Block announces 4Q 2022 financial results Bitcoin profits drop 25% appeared first on Our Bitcoin News.
