Square’s Cash App platform saw a surge in first-time bitcoin buyers last month, CFO Amrita Ahuja told CNBC on Wednesday.
“We had 3 million people transacting bitcoin through the Cash app in 2020 and 1 million were new to bitcoin in January ”Ahuja said on” Squawk Alley, “just a day after his company announced that it 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 January surge in bitcoin interest among Cash app users coincided with a continued bullish move in the digital currency last month. On January 1, bitcoin was trading below $ 30,000 per unit. It hit $ 40,000 each for the first time about a week later, though it mostly declined in value during the second half of January.
Bitcoin surpassed $ 58,000 for an all-time high on Sunday after making its first trip above $ 50,000 last week. Even with solid gains on Wednesday, a huge sell-off earlier this week brought bitcoin below $ 50,000. However, Bitcoin is still rising more than 70% so far this year 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 the previous fall. Its initial entry into the cryptocurrency market came as Bitcoin was in the midst of a major rally in 2017, hitting what was then a record high of nearly $ 20,000 in December. Then there was a major setback throughout 2018 in what is known as the “crypto winter”, when bitcoin lost 80% of its value.
But in 2020, Bitcoin started a massive rally when several high-profile investors touted the digital token as a strong hedge against inflation and established companies like PayPal entered.
Square itself bought $ 50 million in bitcoin in October using existing cash on its balance sheet. On Tuesday, the firm led by Jack Dorsey announced that it bought an additional $ 170 million worth of bitcoin. Both bitcoin purchases represent about 5% of the company’s cash holdings, Ahuja told CNBC.
Square’s bitcoin holdings, 8,027 coins in total, were worth around $ 400 million based on Wednesday’s price. Dorsey, one of the best-known proponents of bitcoin, once predicted that it would eventually become the internet’s “single currency.” He also runs Twitter.
“We believe that Bitcoin is aligned with our purpose, which is economic empowerment,” said Ahuja, explaining Square’s investments. “Economic empowerment is about providing access to financial tools more broadly, even to people who haven’t had them before. We think bitcoin is one way that could enable that in the future.”
Cryptocurrency bulls have compared bitcoin to “digital gold,” saying that because its supply is limited to 21 million units, it can be a powerful store of value. There are currently around 18.64 million bitcoins in circulation, according to Coindesk. The new bitcoins hit the market as a reward for so-called miners, who use high-powered computers to verify transactions through the decentralized network.
Volatile trading has been a hallmark of bitcoin, with some crypto skeptics pointing to those considerable fluctuations as a cause for concern when a company invests cash from its balance sheet in the digital asset.
“We think long-term arc,” Ahuja said, when asked about volatility. “In general, the investment we have made so far is 5% of our cash, and the business that we have related to bitcoin through the Cash App is approximately 5% of our gross profit. We will evaluate this investment on an ongoing basis. It will be dynamic. We will respond to the market environment, but ultimately, we are investing in that long-term vision. “
Other companies that have recently moved to crypto include Tesla, which earlier this month announced that it bought $ 1.5 billion worth of bitcoin. Bank of New York Mellon, the oldest bank in the US, said on February 11 that it plans to launch a digital assets division later this year.
Square, which is up more than 200% in the past 12 months, fell more than 6% on Wednesday to around $ 240 a share.