Square’s Cash App platform saw an increase in the number of bitcoin buyers for the first time last month, CFO Amrita Ahuja told CNBC on Wednesday.
“We had 3 million people trading bitcoin through the Cash App in 2020 and 1 million who were new to bitcoin in January [2021]”Ahuja said in” Squawk Alley “, just a day after his company announced that it bought more of the world’s largest cryptocurrency with cash on the company’s fintech balance sheet.
Cash App is Square’s point-to-point payment platform, which also allows users to buy and sell assets such as bitcoin and stocks.
January’s peak in bitcoin interest among Cash App users coincided with a continued upward movement in the digital currency last month. On January 1, bitcoin was traded below $ 30,000 per unit. It reached $ 40,000 each for the first time about a week later, although it declined in value during the second half of January.
Bitcoin topped $ 58,000 for an all-time Sunday, after making its first trip above $ 50,000 last week. Even with solid gains on Wednesday, a large settlement earlier this week took bitcoin below $ 50,000. However, Bitcoin is still more than 70% to date and more than 400% in the last 12 months.
Square began allowing almost all of its users to buy and sell bitcoins through its payment app in January 2018, after a more limited launch last fall. Its initial entry into the crypto market came when bitcoin was experiencing a huge rise in 2017, reaching what was then a record of almost $ 20,000 in December. Then, there was a big setback during 2018 in what became known as the “cryptographic winter”, when bitcoin lost 80% of its value.
But in 2020, bitcoin began a major recovery when several high-profile investors praised the digital token as strong protection against inflation and established companies like PayPal took action.
Square itself bought $ 50 million in bitcoins in October, using the existing cash on its balance sheet. On Tuesday, the company led by Jack Dorsey announced that it bought an additional $ 170 million in bitcoin. Both bitcoin purchases make up about 5% of the company’s cash, Ahuja told CNBC.
Square’s bitcoin holdings – 8,027 coins in total – were worth about $ 400 million based on Wednesday’s price. Dorsey, one of the most well-known supporters of bitcoin, once predicted that it would become the “single currency” of the Internet. He also runs Twitter.
“We feel that bitcoin is aligned with our purpose, which is economic strengthening,” said Ahuja, explaining Square’s investments. “Economic empowerment is about bringing access to financial tools more broadly, including for people who have not had them before. We think bitcoin is a way that can enable this in the future.”
Cryptographers compared bitcoin to “digital gold”, saying that since its supply is limited to 21 million units, it can be a powerful store of value. There are about 18.64 million bitcoins in circulation today, according to Coindesk. New bitcoins enter the market as a reward for so-called miners, who use high-powered computers to verify transactions on the decentralized network.
Volatile trading has been a hallmark of bitcoin, and some cryptoceptics point to these considerable fluctuations as a cause for concern when a company invests its balance sheet cash in digital assets.
“We think about the long-term arc,” said Ahuja, when asked about volatility. “Overall, the investment we have made so far is 5% of our cash, and the business we have related to bitcoin through the Cash App is about 5% of our gross profit. We will evaluate this investment on an ongoing basis. We will respond to the market environment, but ultimately, it is in this long-term vision that we are investing. “
Other companies that switched to encryption recently include Tesla, which earlier this month announced that it bought $ 1.5 billion in bitcoins. Bank of New York Mellon, the oldest bank in the United States, said on February 11 that it plans to launch a digital assets division later this year.
Square, which has risen more than 200% in the past 12 months, fell more than 6% on Wednesday, to about $ 240 per share.