Square CFO: “No Plans” to Buy More Bitcoin At This Time After Losing $20M Due to Price Drop
Jack Dorsey’s Square will focus on “other opportunities” to learn with bitcoin and will be part of the crypto needing “innovation in terms of renewables and clean energy.”
Jack Dorsey’s payments company Square has no plans to buy more Bitcoin for its corporate treasury, says chief financial officer Amrita Ahuja.
“We don’t have any plans at this point to make further purchases,” Ahuja told Financial News in an interview. However, there are still “lots of other opportunities for (Square) to learn with bitcoin,” she added.
The company has invested $220 million in Bitcoin, on which it lost $20 million in the last quarter due to Bitcoin price ranging between $45k and $65k in the past few months after surging 1,610% in a matter of thirteen months.
As a corporate treasury, one should buy bitcoin on the spot market and hedge it with futures that have been up until recently locking in 30%-40% annualized, noted trader and economist Alex Kruger. By holding the crypto assets, corporations are turning a “winner into a loser,” he said.
“If going to hodl blindly, corporates should go for cryptos that produce yield,” said Kruger, adding that why these corporates “are going to love Ethereum.”
Innovation in renewables and clean energy
Square’s Cash App had a record Q1 2021, generating $3.51 in Bitcoin revenue, up 11x from a year earlier at $306 million. Its gross profit from Bitcoin transactions was also a new all-time high of $75 million, which is the fees that Square collects and represents 2% revenue from cryptocurrency.
CEO Dorsey is a Bitcoin proponent whose long-term focus for Bitcoin is enabling it to be a “native currency” of the internet.
Last year, Square bought $50 million worth BTC for its portfolio, and then in February this year, another $170 million were added. This $220 million investment represents about 5% of its cash on hand. But that is all for the company.
“There’s no plans at this point to re-evaluate where we are from a treasury standpoint,” said Ahuja.
“We’re always evaluating, and as ever, I think we’d be customer-led,” she said. “As we see the evolution of the bitcoin product or crypto products in general, I think we’ll make further assessments at that point.”
Earlier this week, Tesla CEO Elon Musk had announced that the company would no longer accept BTC for its car purchases citing environmental concerns but is not selling any BTC from its corporate treasury either.
Square meanwhile has launched a $10 million initiative to promote the usage of clean energy for Bitcoin's supply chain. It also published a joint report with Ark Invest to solve this clean energy problem. Ahuja said,
“Our position has always been that this is an area that needs innovation in terms of renewables and clean energy, and we want to be a part of that.”
“There’s a broader supply chain question around how renewables and clean energy become a greater part of the blockchain in general and a greater part of the overall mining and transaction network…It’s the overall fixed footprint of the network that we need to address.”