Square, a US-based mobile payments startup, announced its first quarterly figures on Wednesday and, interestingly, revenue from its Bitcoin-based services topped its mainstream financial services.
The total revenue of the Cash App stood at $528 million for the first quarter of 2019, out of which $306 million were from Bitcoin sales and the rest from fiat-based services.
Despite the impressive figures, the platform only made $7 million in profits from Bitcoin sales. For fiat-based services, however, the majority were in profits – the company earned $178 million in profits from non-Bitcoin revenue.
“In the first quarter, Cash App gross profit grew 115% year over year, ” the company stated.
“We deduct bitcoin revenue because our role is to facilitate customers’ access to bitcoin. When customers buy bitcoin through Cash App, we only apply a small margin to the market cost of bitcoin, which tends to be volatile and outside our control, ” the shareholders’ letter explained the low-profit margin for Bitcoin-based services.
More and more people are buying Bitcoin
Notably, the profits from the Bitcoin saw a significant rise as, for the entire 2019, Square Bitcoin-related profits only stood at $9 million. This is primarily due to the steep rise in Bitcoin revenue – the platform generated only $178 million from Bitcoin sales last year and merely $65 million in the first quarter of 2019.
“Bitcoin revenue for the three months ended March 31, 2020, increased by $240.6 million or 367%, compared to the three months ended March 31, 2019. The increase was due to growth in the number of active bitcoin customers, as well as growth in customer demand, ” Square stated.
Meanwhile, Square is also gearing up to launch lending services after obtaining approval from the US Federal Deposit Insurance Corporation (FDIC). It will provide commercial loans to the merchants using Square and is aiming to launch services by the next year.