• Jack Dorsey’s payments firm outperformed expectations.
  • Block will convert 10% of gross Bitcoin profit into buying more Bitcoin.
  • A letter to shareholders failed to address reports of illicit transactions.

Twitter co-founder Jack Dorsey’s fintech conglomerate Block outpaced expectations in its latest financial report.

Now, it’s doubling down on Bitcoin buys.

The payments company first began adding Bitcoin to its balance sheet in 2020, picking up $220 million in the cryptocurrency.

That investment has paid off, according to its latest shareholder letter, having risen by 160%.

At the end of the first quarter, Block held more than $573 million in Bitcoin. The company is the seventh-largest corporate holder of Bitcoin. Software company MicroStrategy, the biggest, holds $13.5 billion, according to Chainalysis.

Block also began a new monthly strategy of using 10% of its gross profit from various Bitcoin products and services to buy even more Bitcoin.

In April, that meant buying $4.4 million in the cryptocurrency. Dorsey told shareholders that the investment “transcends technology.”

Rising tides

Rising Bitcoin prices and Block’s revenues are closely linked.

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As the price of Bitcoin has risen, powered by the launch of 11 spot Bitcoin exchange-traded funds in the US this year, Block’s activity has increased.

Block is the parent company of merchant payments service Square and mobile payments app Cash App. Cash App generated $4.17 billion in revenue in the first quarter, a year-over-year increase of 23%.

The majority of that was Bitcoin revenue — from users buying and selling Bitcoin and making Bitcoin withdrawals, among other in-app activities.

Overall, Block’s total net revenue was almost $6 billion in the first quarter, topping analysts’ expectations.

Not addressed in the latest filing or shareholder letter were reports of federal prosecutors inspecting Block transactions for alleged malfeasance.

On Wednesday, NBC reported, citing sources familiar, that Block is under scrutiny for allegedly failing to correctly assess risk for Cash App and Square users, as well as for hosting transactions linked to terrorist groups.

Block’s stock plummeted 9% on Wednesday, falling as low as $66.17.

At the market open on Friday, the shares had reclaimed their losses and then some, trading at $76.49, according to MarketWatch.

Liam Kelly is DL News’ Berlin correspondent. Contact him at liam@dlnews.com.

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