Square’s Cash App platform saw an increase in new bitcoin buyers last month, CFO Amrita Ahuja told CNBC on Wednesday.
“We had 3 million people transactions in bitcoin via Cash App in 2020 and 1 million new to bitcoin in January [2021]Ahuja said on “Squawk Alley,” just a day after her company announced it had bought more of the world’s largest cryptocurrency with cash on the fintech company’s balance sheet.
Cash App is Square’s peer-to-peer payment platform, which also allows users to buy and sell assets such as bitcoin and stocks.
The spike in bitcoin interest in January among Cash App users coincided with a sustained upward movement in the digital currency last month. On January 1, bitcoin was trading below $ 30,000 per unit. It first reached $ 40,000 each about a week later, although it largely declined in value in the second half of January.
Bitcoin hit $ 58,000 for an all-time high Sunday after making its maiden trip above $ 50,000 last week. Even with solid gains on Wednesday, a major sell-off earlier this week, bitcoin put bitcoin below $ 50,000. However, Bitcoin is still up more than 70% since the beginning of the year and more than 400% in the last 12 months.
Square began letting almost all of its users buy and sell bitcoin through its payment app in January 2018, following a more limited rollout in the previous fall. Its first entry into the crypto market came when bitcoin was in the midst of a major rally in 2017, hitting a record high of nearly $ 20,000 in December. Then in 2018 came a major decline in what has become known as the “crypto winter”, when bitcoin lost 80% of its value.
But in 2020, bitcoin started a massive rally as a number of high profile investors touted the digital token as a strong inflation hedge and established companies like PayPal moved in.
Square itself bought $ 50 million worth of bitcoin in October with existing cash on its balance sheet. On Tuesday, the Jack Dorsey-led company announced that it has purchased an additional $ 170 million worth of bitcoin. Both bitcoin purchases amount to about 5% of the company’s cash, Ahuja told CNBC.
Square’s bitcoin holdings – a total of 8,027 coins – were worth about $ 400 million based on Wednesday’s price. Dorsey, one of bitcoin’s best-known proponents, once predicted that it would eventually become the Internet’s “common currency”. He also runs Twitter.
“We believe bitcoin is aligned with our goal of economic empowerment,” said Ahuja, explaining Square’s investments. “Economic empowerment is about making financial instruments more widely accessible, even to people who have never had it before. We think bitcoin is a way to make that possible for the future.”
Crypto bulls have likened bitcoin to ‘digital gold’ and say it can be a powerful store of value as supply is limited to 21 million units. According to Coindesk, there are currently approximately 18.64 million bitcoins in circulation. New bitcoins enter the market as a reward for so-called miners, who use powerful computers to verify transactions across the decentralized network.
Volatile trading has been a hallmark of bitcoin, and some crypto skeptics point to those significant fluctuations as a cause for concern when a company invests its balance sheet money in the digital asset.
“We think about the long-term arc,” said Ahuja, when asked about the volatility. “Overall, the investment we’ve made so far is 5% of our money, and the business we have related to bitcoin through the Cash App is about 5% of our gross profit. We are going to continuously evaluate this investment. will be dynamic. We respond to the market environment, but ultimately we invest in that long-term vision. “
Other companies that have recently switched to cryptocurrency include Tesla, which earlier this month announced it had purchased $ 1.5 billion worth of bitcoin. Bank of New York Mellon, the oldest bank in the US, said on Feb. 11 that it plans to launch a digital assets division later this year.
Square, which was up more than 200% in the past 12 months, was down more than 6% on Wednesday to about $ 240 a share.