Square’s Cash app platform experienced an increase in bitcoin buyers for the first time last month, CFO Amrita Ahuja, chief financial officer, told CNBC on Wednesday.
“We had 3 million people making bitcoin transactions through Cash App in 2020 and 1 million people who were new to Bitcoin in January [2021]Ahuja told Squawk Alley just a day after his company announced it had bought more of the world’s largest cryptocurrency with cash on the balance sheet of fintech technology company.
Cash App is Square’s peer-to-peer payment platform, which also allows users to buy and sell assets such as bitcoin and stocks.
The rise in January bitcoin interest among Cash App users coincided with a continued upward movement of the digital currency last month. On January 1, bitcoin traded below $ 30,000 per unit. It hit $ 40,000 per piece for the first time about a week later, though it fell mostly in value during the second half of January.
Bitcoin topped $ 58,000 for an all-time high on Sunday after making its first trip above $ 50,000 last week. Even with solid gains on Wednesday, a big sale earlier this week hit Bitcoin below $ 50,000. However, Bitcoin continues to rise by more than 70% to date and by more than 400% in the last 12 months.
Square began allowing almost all of its users to buy and sell bitcoins through its payment app in January 2018, following a more limited release the previous fall. Its initial entry into the crypto market came when Bitcoin was in full swing in 2017, reaching what was then a record nearly $ 20,000 that December. Then there was a big setback throughout 2018 in what is known as the “crypto winter,” when Bitcoin lost 80% of its value.
But in 2020, Bitcoin began a massive rally, as several high-profile investors promoted digital testimony as strong inflation coverage and established companies like PayPal.
Square itself bought bitcoins worth $ 50 million in October with existing cash on its balance sheet. On Tuesday, the Jack Dorsey-led company announced it had bought an additional $ 170 million bitcoin. The two bitcoin purchases account for about 5% of the company’s cash holdings, Ahuja told CNBC.
Square’s bitcoin holdings (8,027 coins in total) were worth about $ 400 million depending on Wednesday’s price. Dorsey, one of Bitcoin’s best-known proponents, predicted that it would end up becoming the “single currency” of the Internet. He also runs Twitter.
“We believe Bitcoin is aligned with our purpose, which is economic empowerment,” Ahuja said, explaining Square’s investments. “Economic empowerment is about facilitating access to financial tools more broadly, including people who haven’t had it before. We believe bitcoin is a way that could allow this for the future.”
Cryptographers have compared Bitcoin to “digital gold,” saying that since its supply has a maximum limit of 21 million units, it can be a powerful store of value. There are currently about 18.64 million bitcoins in circulation, according to Coindesk. New bitcoins hit the market as a reward for so-called miners, who use high-powered computers to verify transactions over the decentralized network.
Volatile trading has been a hallmark of bitcoin, and some cryptocurrencies point to these important fluctuations as a cause for concern when a company invests its cash balance in digital assets.
“We think about the long-term arc,” Ahuja said, when asked about volatility. “In general, the investment we have made so far is 5% of our cash and the business we have related to Bitcoin through Cash App is about 5% of our gross profit. We will evaluate this investment continuously. We will be dynamic. in the market environment, but ultimately this long-term vision is what we are investing in. “
Other companies that have recently switched to cryptography include Tesla, which earlier this month announced it was buying bitcoin worth $ 1.5 billion. Bank of New York Mellon, the oldest bank in the United States, said Feb. 11 that it plans to launch a digital asset division later this year.
Square, which has risen more than 200 percent in the past twelve months, fell more than 6 percent on Wednesday, to $ 240 a share.