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Former Twitter CEO Jack Dorsey’s digital payments firm Block Inc.’s second-quarter profit surged 29% year-over-year to $1.47 billion, even as its bitcoin business sank due to lower customer demand and bitcoin (BTC) Prices fell and fell.

The financial services company mainly generates bitcoin revenue by offering BTC trading services through its digital payments app Cash App.

Block Inc. noted that the business generated $1.79 billion in bitcoin revenue in the quarter, down 34% year-over-year, while bitcoin gross profit was only $41 million, suggesting it could be a high-profile company offering bitcoin services to customers. cost enterprise.

Block Inc. said the decline in bitcoin revenue was due to “broader uncertainty” over the crypto asset, stating:

“The year-over-year decline in bitcoin revenue and gross profit was primarily due to lower consumer demand and lower bitcoin prices, partly due to greater uncertainty in the crypto asset, which offset the benefits of price volatility in bitcoin this quarter. ”

However, Block Inc. emphasized that the decline in BTC profits does not reflect the broader performance of the business. It also noted that BTC profits could fluctuate over time due to “changes in customer demand or Bitcoin market prices.”

The company also noted that it recognized a $36 million impairment loss on BTC assets, but this may only be a loss on paper.

Crypto is classified as an intangible asset on the balance sheet under U.S. accounting procedures, and companies must report losses when the asset’s price falls below its cost basis, even if a gain or loss is realized through sales in a given quarter.

The company noted that as of June 30, 2022, its investment in Bitcoin had a fair value of $160 million based on market prices.

related: Interview with Kevin O’Leary: Bitcoin at $28K next or lower? | Market Dialogue with Crypto Jebb

However, investors appeared unimpressed by Block Inc.’s performance in the second quarter, as the company’s stock SQ fell 7.42% in after-hours trading to $83 at the time of writing.

Bloomberg said this was because the company reported lower-than-expected transaction volumes of $52.5 billion, as be opposed to Estimated at $53.47 billion.

bitcoin from block

Since announcing in June that Block Inc. was bypassing the Web3 model to build a Bitcoin blockchain-focused Web5 project, avid bitcoin giant Dorsey has been mum on his plans for digital gold.

Web5 is essentially a decentralized web platform, or DWP, which allows developers to create decentralized web applications through DIDs and decentralized nodes, which will also have a currency network built around BTC, not smart Contract-backed tokenization.