Bitcoin

Block Acquires Bitcoin Monthly Using 10% of BTC Earnings

Jack Dorsey’s financial services and digital payments company, Block Inc., has announced that it will invest 10% of its monthly Bitcoin-related gross profits into BTC purchases. This announcement came after the release of Block’s first-quarter earnings for 2024, showcasing significant profits from its Bitcoin operations.

Block reported $80 million in Bitcoin-related gross profits in the first quarter alone. With this promising trend, the company plans to implement a new dollar-cost averaging (DCA) program that could potentially lead to around $24 million in BTC investments within a year. The aim is to enhance Block’s BTC holdings by strategically purchasing in a manner that minimizes the impact on Bitcoin’s price.

Jack Dorsey shared insights into the company’s investment strategy in a recent post, confirming that Block is DCA’ing Bitcoin every month. He also provided a detailed document titled “Bitcoin Blueprint For Corporate Balance Sheets” as a guide for other corporations looking to integrate BTC into their financial strategies.

Starting in October 2020, Block, formerly Square, began making substantial Bitcoin acquisitions, acquiring 4,709 BTC for $50 million and an additional 3,318 BTC for $170 million in February 2021. As of March 31, 2024, Block holds approximately 8,038 BTC, representing about 9% of its total cash and marketable securities.

Block’s method involves purchasing Bitcoin through over-the-counter transactions with a liquidity provider, utilizing a Time-Weighted Average Price (TWAP) to minimize price slippage. This process optimizes trade execution over a short two-hour window during periods of high liquidity and low price volatility.

The company’s strategy aligns with its belief in Bitcoin as a tool for global economic empowerment. Block views Bitcoin as an instrument for individuals worldwide to engage in a global monetary system and secure their financial future.

In April 2024, Block executed purchases totaling $4.4 million under the DCA scheme. Beyond investments, Block is involved in various BTC-related products and services such as Cash App and TBD, aimed at decentralizing financial services.

Block has adapted to the latest accounting standards for digital assets, including the Financial Accounting Standards Board’s Accounting Standards Update No. 2023-08. This update requires Bitcoin investments to be re-measured to fair value, with changes reflected in net income, a departure from prior accounting practices treating BTC as indefinite-lived intangible assets.

The document also highlights Block’s comprehensive approach to the custody of digital assets, focusing on secure cold storage solutions backed by Hardware Security Modules (HSMs) to safeguard private keys and BTC holdings from unauthorized access.

As of now, BTC is trading at $59,581 and needs to surpass $60,000 according to the 1-day chart from TradingView.com.

Featured image from BBC, chart from TradingView.com



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