Square Doubles Quarterly Bitcoin Revenue to $1.6 Billion

People are increasingly buying Bitcoin from Square's Cash App.

In a letter to shareholders today, Square reported revenue from Bitcoin sales of $1.63 billion from its Cash App—for a gross profit of $32 million—during the third quarter of 2020.

That represents an 1,100% increase from Q3 2019 revenues. Revenue is also up from the second quarter of 2020, when Square raked in $875 billion from consumers buying Bitcoin on the Cash App.

According to the letter, "Bitcoin revenue and gross profit benefited from an increase in bitcoin actives and volume per customer."

Bitcoin is a key part of Cash App's offerings, which also lets users buy stocks and auto-invest for stocks or Bitcoin, in addition to sending and receiving cash.

Still, though it generates high revenues, Bitcoin isn't a main profit center. The $32 million in gross profit from Bitcoin is a fraction of the $385 million gross profit across Cash App.

Moreover, the letter explains why the company points to $435 million in revenue from the Cash App, which excludes Bitcoin revenue:

"We deduct bitcoin revenue because our role is to facilitate customers’ access to bitcoin. When customers buy bitcoin through Cash App, we only apply a small margin to the market cost of bitcoin, which tends to
be volatile and outside our control."

On a call explaining the report, Square CEO Jack Dorsey reiterated that the company believes Bitcoin will become the "native currency of the internet."

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That goes beyond making it available for purchase via Cash App. The company also holds Bitcoin on its books. In October, Square purchased 4,709 Bitcoin, then worth $50 million.

That purchase—when combined with MicroStrategy's strong Bitcoin buys and PayPal's entry into the Bitcoin space—may help explain why Square's Bitcoin is now worth closer to $72 million.