Led by Twitter co-founder Jack Dorsey, Block Inc has said it will invest 10 per cent of its monthly Bitcoin-related gross profits into purchasing Bitcoin.
The fintech company announced the strategic shift following the release of its first-quarter earnings for 2024.
Block reported Bitcoin-related gross profits of $80 million in the first quarter alone. Block aims to enhance its BTC holdings through a dollar cost averaging (DCA) programme.
According to the website Bitcoinist, by gradually investing in BTC over time, Block intends to minimise the impact on Bitcoin's price while steadily increasing its cryptocurrency assets.
If the trend continues, the company could potentially invest approximately $24 million in BTC within one year, further solidifying its position in the cryptocurrency market.
Jack made the announcement on X, formerly known as Twitter, where he added a memo to provide an update on Block’s plans.
The document reveals that Block, previously called Square, started buying a lot in October 2020. As of March 31, 2024, Block has around 8,038 BTC, which is about 9 per cent of all the money and securities they have.
Block's strategy includes using over-the-counter transactions with a liquidity provider. They use a Time-Weighted Average Price (TWAP) to keep the price slippage low. This method aims to make the trade happen efficiently within a two-hour window, capitalising on times when there's lots of liquidity and the price is stable.
"We view Bitcoin as an instrument of global economic empowerment; it is a way for individuals around the world to participate in a global monetary system and secure their own financial future," the document says.
Block has updated its accounting practices to comply with the latest regulations for digital assets.
Following the adoption of the Financial Accounting Standards Board’s Accounting Standards Update No. 2023-08 in December 2023, Bitcoin investments must now be re-evaluated to their fair value. Any changes in value will be reflected in the company's net income. This marks a notable change from previous accounting methods, where Bitcoin was considered as indefinite-lived intangible assets.
The document also read, "We believe our bitcoin ecosystem can help address inefficiencies in the current global financial system. Our bitcoin ecosystem includes our Cash App product, which provides customers the ability to buy and sell bitcoin; TBD, which is an open developer platform focused on making the decentralized financial world accessible for everyone; our bitcoin hardware projects, which include Bitkey, a self-custody bitcoin wallet, and a bitcoin mining system; and Spiral, an independent team focused on contributing to bitcoin open source work."
From the start of its Bitcoin operations, Block has built a robust storage system, mainly using cold storage solutions supported by Hardware Security Modules (HSMs). This setup guarantees that the private keys needed to access BTC holdings are carefully managed and protected from unauthorised access.
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