Square’s fledgling Bitcoin trading has so far failed to make a significant impact on the company’s financial performance, the firm’s latest earnings report has indicated.
On January 31, Square enabled Bitcoin trading for most users of its popular Cash mobile application. The move followed several months of testing, during which the Bitcoin trading option was available to a small number of Cash users.
Published on Wednesday, Square’s financial results for the first three months of the year showed that the company had made about $34.1 million of Bitcoin-related revenue in the period, which represents about 5% of the company’s total quarterly income. The results also revealed that the company had spent about $33.9 million to acquire the digital currency, which means that it made only a small return of just over $200,000 from its Bitcoin venture in the quarter.
However, Square may have actually lost money on its cryptocurrency business, notes Fortune in a recent report. The publication points out that, according to the quarterly results, the value Square recorded for its Bitcoin holdings was only $200,000 at the end of the first quarter, down from the $300,000 they were worth at the end of 2017. Square acknowledged that it had taken a small hit, but indicated that it did not consider this as a cause for concern.
“Losses on Bitcoin for the three months ended March 31, 2018 were insignificant,” Square said in the report.
The underwhelming performance of Square’s Bitcoin business may be due to the significant price decline the cryptocurrency saw during the first three months of the year. Another factor could be the company’s strategy of acquiring the digital coin, which is similar to the way average investors would buy the virtual currency. Square explained in the report that it “purchases Bitcoin from public cryptocurrency exchanges or from customers”.