Square posts $45 million in bitcoin-related impairments in second quarter

Square said late Sunday that its bitcoin-related investments had a $45 million drag on the company’s second-quarter operating income. That’s more than double its first-quarter impairment.

The digital payments company revealed in February it bought $170 million worth of bitcoin, expanding on its October 2020 purchase. That represented about 5% of the company’s total assets as of the end of 2020. Square’s disclosure came in its earnings report Sunday, which was released earlier than planned to coincide with the announcement the company would buy the Australian financial tech company Afterpay in a $29 billion deal.

Companies are increasingly leaning into bitcoin as it becomes more mainstream. However, the world’s largest digital coin had a rough second quarter. Bitcoin’s price peaked above $63,000 in April before dropping below $30,000 in early July. Bitcoin was trading at just above $39,000 on Monday.

Tesla, for example, recorded a $23 million bitcoin-related impairment in its last quarter, the company said in its second-quarter earnings report late last month.

Square said it still saw “significant growth in bitcoin revenue year over year” this past quarter. Bitcoin revenue came in at $2.72 billion, up approximately three times year over year. At the same time, bitcoin gross profit was $55 million. That’s approximately 2% of bitcoin revenue.

The company’s gross profit increased 91% from a year ago, which marked a record quarterly growth rate. Net revenue excluding bitcoin came in at $1.96 billion for the quarter, an 87% rise year over year.

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