CashApp and Grayscale took in 50% of all new Bitcoin in Q1

Two major firms that deal in crypto assets, Square and Grayscale, bought up a combined amount of Bitcoin equivalent to more than half of all Bitcoin mined in the first quarter of 2020. 

Grayscale is a crypto investment fund, and Square, a payments company run by Twitter CEO Jack Dorsey, owns CashApp, whose users can buy Bitcoin. 

Combined, they have bought up approximately 85,000 Bitcoin, worth $695 million, according to ListedReserve, a firm that runs several Bitcoin funds, which compiled data from publicly issued documents. During the same time period, 163,800 Bitcoin was mined. They may have purchased the Bitcoin from miners, or exchanges, but it was equivalent to 52% of the Bitcoin mined that quarter.

This is over double the amount bought in the fourth quarter of 2019, when the equivalent of 23.14% of all Bitcoin mined went to the two firms. 

It’s the biggest percentage increase in a single quarter ever; the closest was between the fourth quarter of 2018 and the first quarter of 2019, when the two companies increased their combined Bitcoin consumption from 9.35% to 16.35%. 

Square hits record purchases

Ryan Watkins, a researcher of crypto analytics firm Messari, said that Square alone bought up $306 million Bitcoin in the first quarter of 2020, the largest amount in a single quarter. 

He notes that this is a 72% increase from the fourth quarter of 2019, and a 367% increase compared to the previous year. In the past twelve months, it has bought up $750 million of Bitcoin. 

But Square’s profit margins are thin: of the $306 million, it made just $7 million in gross profit, according to Messari. 

Square’s CEO, Jack Dorsey, is a fan of Bitcoin. In an appearance on the Artificial Intelligence Podcast late last month, Dorsey called the Bitcoin whitepaper “poetry,” and “one of the most seminal works of computer science in the last 20-30 years.”

Grayscale brings the big bucks

Grayscale is heavily investing in crypto. In 2019, it raised $600 million for a crypto fund. 

A recent report showed that it also bought 48.4% of all newly mined Ethereum—the second largest cryptocurrency by market cap. It now holds over one percent of Ethereum’s circulating supply. 

The huge purchases put it in a prime position to benefit from next week’s Bitcoin halving.