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Square Inc increased the stakes in bitcoin by investing an additional $ 170 million and CEO Jack Dorsey on Tuesday promised to “double down” the payments company’s commitment to the world’s largest cryptocurrency.
“The internet needs a native currency, and we think bitcoin is,” said bitcoin enthusiast and CEO of social media firm Twitter Inc.
Square bought 3,318 bitcoins in the fourth quarter, adding to the widespread acceptance of the digital currency that has been gaining support from several large investors.
“By owning bitcoin, our incentives are aligned with the skin in the game,” Dorsey said in a post-earnings conference call with analysts.
Square has been involved with the coin for years and its Cash app, a payments service, has allowed users to trade with it since 2018.
The app had three million active bitcoin customers in 2020, and one million new users bought the coin for the first time in January, the company said.
In October of last year, Square bought about 4,709 bitcoins at a total price of $ 50 million. Since then, the coin’s price has climbed record high, with Tesla Inc investing $ 1.5 billion and Bank of NY Mellon Corp saying it will establish a unit to help its clients trade digital assets.
In its latest purchase, Square paid more than $ 51,200 per bitcoin, according to Reuters calculations. However, the currency’s spot price plunged more than 13 percent to less than $ 47,000 on Tuesday amid a more widespread market recession.
Shares of the company fell about 5 percent after Tuesday’s bell, extending the losses recorded during the session.
Square’s revenue for the quarter more than doubled to $ 3.16 billion, which the company said was helped by bitcoin purchases on the Cash App.
Square’s gross profit on bitcoin trading increased 13 times in the fourth quarter, but it was still only 2 percent of its revenue from the cryptocurrency. His bitcoin holdings are now worth about 5 percent of his $ 4.4 billion cash pile.
The company posted adjusted earnings of 32 cents a share, beating market expectations of 24 cents.
