Block's (SQ) Q1 Earnings Show Continued Bitcoin Belief

Block (SQ), the payments company led by Jack Dorsey, released its first-quarter 2024 earnings yesterday, reporting a gross profit of $2.09 billion, up 22% year over year, and consistent with the fourth quarter. SQ's adjusted EBITDA was $705 million, or almost double year over year, while its Adjusted Operating Income was $364 million, up 7x year over year.

SQ's share ended the trading session 5.18% up at $70.30, and stands at $75.78 in after-hours trading.

Block's Bitcoin strategy

More interestingly, in its earnings call and a related press release, the company highlighted its ongoing strategy of accumulating Bitcoin (BTC) on its balance sheet.

"We believe the world needs an open protocol for money, one that’s not owned or controlled by any single entity. We believe bitcoin is the best and only candidate to be that protocol, and to ultimately become the native currency of the internet," Dorsey said in a letter to shareholders.

An open protocol for money, according to Dorsey, would allow Block to "build an amazing product experience once and ship it globally" without needing to navigate various payment schemes.

Dorsey further detailed Block's three-pronged strategy for Bitcoin: making it accessible, making it more secure, and making it useable everyday. Block already has a platform within its Cash App for buying, holding, and selling Bitcoin. This has been a success, with over 21 million Cash App users having used Bitcoin, Block said. It also highlighted Bitkey, its non-custodial wallet offering advanced security features, and the company's introduction of new mining hardware to contribute to network security.

"The internet will have a native currency; it’s just a matter of time," Dorsey said, adding "There’s an opportunity to build cohesive and regulatory-compliant connections between [existing and emerging financial systems]."

Dollar-Cost Averaging and Growing Bitcoin Holdings

Block also announced a new program to invest 10% of its monthly Bitcoin-related gross profit into purchasing additional Bitcoin. This dollar-cost averaging (DCA) approach aims to mitigate price volatility.

Block was one of the first publicy listed companies to add Bitcoin to its balance sheet in 2020. It said its initial investment of $220 million in Bitcoin has grown to $573 million, and the company is open-sourcing its "Bitcoin Blueprint for Corporate Balance Sheets" to encourage others to follow suit.