It wasn’t too long ago, June 26th for the record, when I wrote about the imminence of potential earnings misses for companies who parked Bitcoin on their balance sheets. In the article Bitcoin Set to Ignite Earnings Fireworks, I wrote, “the most high profile company to have taken this action is Tesla, which in 2021 purchased roughly $1.5 Billion. But, lesser in scale, and greater in relevance here, is another 2021 Q1 purchase by fintech and payments company Square, this occurring at a time when Bitcoin was trading at around $48k.” Well, guess what? Block reported second 2nd quarter results on Thursday and took a $36M impairment charge for its Bitcoin investments. This makes this week’s most interesting for two reasons. First, I’ve questioned the wisdom here – numerous times – of holding the highly volatile and speculative cryptocurrency on corporate balance sheets. I’ve opined that it’s reckless and irresponsible. As it relates to Square specifically, having over 40% of the company’s revenue derived from Cash App ecosystem users shuffling the cryptocurrency back-and-forth doesn’t serve a legitimate business purpose – it’s not being used for the purchase of goods and services. Second, at this point in time, one can’t help but question the competency of Block Founder and Head Executive, and Twitter Founder and former CEO, Jack Dorsey as a business operator. Between Block’s Bitcoin maneuverings and Twitter’s inability to turn a profit in 8 of the last 10 years, Dorsey’s track record on building and leading companies to profitability and enhancing shareholder value screams of incompetence. And this creates an interesting contradiction – on the one hand, there’s Jack Dorsey the programmer, whose innovations – Block and Twitter – ooze of Promethean exceptionalism, and on the other, there’s Jack Dorsey, the executive and operator, who’s kind of, well… a clown.
Block reports 34% drop in Cash App bitcoin revenue, takes $36M bitcoin loss in Q2