KEY POINTS
- Block will implement a monthly strategy of purchasing Bitcoin using 10% of its profits
- The company held over 8,000 BTC as of late March, as per the shareholder letter
- The strategy was revealed a day after a scathing report that alleged Block's key units had compliance lapses
Financial technology (fintech) firm Block has announced a new Bitcoin strategy following the company's better-than-expected first-quarter 2024 earnings result, and it has similarities to El Salvador's strategy, though on a slower scale.
Block founder Jack Dorsey, who is also a co-founder and the former CEO of Twitter (now X), wrote in a Wednesday shareholder letter that the fintech firm was "the first to recognize" Bitcoin's potential in driving corporate growth, which is why investing into the world's largest cryptocurrency by market value and holding the asset within its treasury is necessary.
Dorsey said Block became the first publicly-listed firm to offer a BTC product in 2018 and since then, it has committed to making the digital asset accessible, more secure, and "usable every day."
Among its Bitcoin-related initiatives are grants to more than 50 developers across over 20 countries around the world that have led to "a dozen foundation open source Bitcoin projects." Block should recognize "the interconnectedness of the Bitcoin ecosystem" as such a move will foster collective growth, resulting in benefits for the company, Dorsey noted.
"Going forward, each month we will be investing 10% of our gross profit from Bitcoin products into Bitcoin purchases," the tech titan said, adding that the said strategy will put the company in a growth position. "It is an investment in a future where economic empowerment is the norm."
A monthly purchase of Bitcoin is somehow similar to the strategy of "Bitcoin nation" El Salvador, which has, under President Nayib Bukele, been purchasing one BTC daily since mid-November 2022. Bukele has said his country will purchase the digital currency until it "becomes unaffordable with fiat currencies."
Block's declared Bitcoin holdings of 8,038 BTC are larger than El Salvador's known treasury, which holds over 5,700 Bitcoin. The company said its BTC holdings are valued at $573 million based on "observable market prices." While Dorsey did not specify how many Bitcoin Block will purchase monthly, it can be a sizeable amount, considering how the fintech firm bought BTC worth $170 million back in Q1 2021.
Dorsey's announcement came on the heels of a report that the company was being investigated by federal prosecutors over allegations of years-long non-compliance at Block's key units, financial service provider Square, and mobile payment service Cash App.
A spokeswoman for Block rejected the allegations, saying the company has established a "responsible and extensive compliance program" and it regularly adjusts its business practices to adapt to emerging threats in the industry.
As of writing, Bitcoin was trading below $60,000.
