Payments company Block Inc (NASDAQ:SQ) reported nearly $2 billion from Bitcoin (CRYPTO: BTC) revenue alone — but Bitcoin gross profit was only 2% of that figure.
What Happened: In its fourth-quarter and full-year financial results reported on Thursday, Block said its Bitcoin revenue in the quarter was $1.96 billion, up 12% year-over-year.
Yet the gross profit from Bitcoin revenue was only $46 million.
“Bitcoin revenue is the total sale amount of Bitcoin to customers. Bitcoin costs are the total amount of Bitcoin we purchase. We purchase Bitcoin to facilitate customers' access to Bitcoin,” said Block in the report.
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Why It's Important: The price of Bitcoin has been particularly volatile over the last three months. In December 2021, Bitcoin was trading above $58,000 but has since lost more than 35% of its value.
The leading digital asset fell to a low of $33,700 at the end of January and is trading at $38,600.
“Compared to the third quarter of 2021, bitcoin revenue and gross profit increased on a quarter-over-quarter basis, driven primarily by increased volatility in the price of bitcoin, which affected trading activity compared to the prior quarter,” stated Block.
The company said that its Bitcoin revenue and gross profit grew 232% and 285%, respectively, on a two-year CAGR basis.
In 2021, Cash App generated $10.01 billion in Bitcoin revenue and $218 million of Bitcoin gross profit, which represented a 119% and 124% increase year-over-year.
“In future quarters, bitcoin revenue and gross profit may fluctuate as a result of changes in customer demand or the market price of bitcoin, particularly as we lap strong growth rates on a year-over-year basis in the first quarter of 2021,” according to the company.
