Payment company Square is loading up on more Bitcoin.
In its fourth-quarter earnings announcement on Tuesday, the payments company said it has purchased approximately 3,318 Bitcoins at a total purchase price of $ 170 million.
That is in addition to the 4,709 BTC it bought in October 2020 at $ 50 million as an asset for its balance sheet. That purchase, coupled with MicroStrategy's aggressive Bitcoin purchases, possibly helped drive the entry of Tesla in the market with the purchase of $ 1.5 billion. The price of Bitcoin has more than quintupled in the last four months.
The two Bitcoin purchases combined total 5% of Square's total cash as of Dec. 31, 2020, the company says.
Square "believes that Bitcoin is an instrument of economic empowerment, providing a way for people to participate in a global monetary system and secure their own financial future," Square says in its statement. "The investment is part of Square's ongoing commitment to bitcoin, and the company plans to evaluate its aggregate investment in bitcoin relative to its other investments on an ongoing basis."
In its full earnings report, the company also revealed that it had earned $ 4.57 billion in Bitcoin revenue from the Cash app for the year, posting a profit of $ 97 million. $ 1.76 billion of that revenue came from the last quarter alone, a 1,000% increase from the fourth quarter of the previous year, as the price of Bitcoin increased from $ 10,500 to $ 28,600 in the fourth quarter.
The Cash app is a competitor to Venmo, Zelle, and other person-to-person payment applications. It differs, in part, by allowing clients to buy stocks and Bitcoin, similar to Robinhood.
The P2P service has been up and running since 2013, but only introduced the buying and selling of Bitcoin in 2018, a little late for the December 2017 bull run, but very early for the current one.
Cash App is generally free for customers. Their business model is to charge merchants a percentage of each transaction. It also charges people to transfer funds more quickly or to make payments by credit card, rather than by debit.
Bitcoin purchases, however, work differently. According to the Cash App website, it charges a service fee and “an additional fee determined by price volatility on US exchanges”.
Square cites that volatility in its decision to deduct Bitcoin income from its overall earnings. However, these small margins, applied to make sure you don't lose no single operation, they have added to the billions as new investors enter a Bitcoin bull market.