shareholder letter

Block’s Q4 Bitcoin revenue down 7% on crypto price decline

Block Inc. outperformed analyst expectations and saw its share price jump in after-hours trading, but its Bitcoin revenue dipped due to price declines.

Jack Dorsey’s payment company Block Inc. reported $1.83 billion of Bitcoin (BTC) revenue from its Cash App business unit in the fourth quarter, representing a 7% fall from the same time last year.

In its Q4 and full-year results announced on Feb. 23, Block attributed the fall in Bitcoin revenue to the decline in BTC price in the year. Bitcoin fell approximately 65% throughout 2022.

This fall in revenue led to a 25% year-on-year drop in Bitcoin gross profit for Cash App, which fell to $35 million in the quarter.

Cash App is a mobile phone payment processing app created by Block, which added support for transactions via the Bitcoin Lightning Network on Oct. 25. It generates Bitcoin revenue by selling Bitcoin to customers through the app.

Cash App gross profit graph from Q4, 2021 to Q4, 2022 Source: Block Inc Q4 shareholder letter

For the full 2022 year, Cash App generated $7.11 billion of Bitcoin revenue and $156 million of Bitcoin gross profit, down 29% and 28% compared to 2021, respectively.

Meanwhile, Block Inc. reported a widened net loss of $114 million for the quarter compared to a loss of $77 million in 2021. Its adjusted earnings before interest, tax, depreciation and amortization (EBITDA) increased 53% to $281 million compared to the same time last year. Total revenue in the quarter was $4.65 billion.

Related: Bitcoin bears attempt to pin BTC price under $23K ahead of this month’s options expiry

The share price of Block jumped in after-hours trading following the earnings report. 

Block Inc. (SQ) share price action over the last day. Source: Barron’s

Some analysts have attributed the jump to the firm’s gross profit growth, which was up 40% in Q4 compared to the prior year, and also beat analyst expectations.

Digital Currency Group halts dividends in an effort to preserve liquidity

Digital Currency Group, a venture capital firm that owns a stake in more than 200 crypto projects, announced the dividend halt while one of its subsidiaries is in financial strife.

Venture capital firm Digital Currency Group (DCG) has told shareholders it is halting its quarterly dividend payments until further notice as it attempts to preserve liquidity.

According to the letter sent to shareholders on Jan. 17, the firm is focused on “strengthening our balance sheet by reducing operating expenses and preserving liquidity.” DCG said it was also considering selling some of the assets within its portfolio.

Its financial issues are derived from the woes of a subsidiary, crypto broker Genesis Global Trading, which reportedly owes creditors more than $3 billion. 

Customers are currently unable to withdraw funds from Genesis after it halted withdrawals on Nov. 16, which has prompted Cameron Winklevoss — on behalf of his exchange Gemini and its users with funds on Genesis — to call for the board of DCG to remove Barry Silbert as CEO of the firm in a Jan. 10 open letter.

According to Winklevoss, Genesis owes Gemini $900 million for funds that were lent to Genesis as part of Gemini’s Earn program, which offers customers the ability to earn an annual yield of up to 7.4%. Winklevoss also claimed DCG owed $1.675 billion to Genesis, although Silbert denied this.

Soon after Winklevoss’s letter, the United States Securities and Exchange Commission (SEC) poured fuel on the fire, charging both firms on Jan. 12 with offering unregistered securities through the Earn program.

Related: Crypto Biz: DCG’s ‘carefully crafted campaign of lies’?

Genesis’ problems first became apparent after the Nov. 16 withdrawal halt, which it blamed on “unprecedented market turmoil” following the collapse of FTX, causing “abnormal” levels of withdrawals.

On Nov. 10, less than a week earlier, Genesis revealed it had around $175 million stuck on FTX, which resulted in DCG sending Genesis an emergency equity infusion of $140 million in an attempt to resolve its liquidity issues.

DCG also owns Grayscale Investments and its series of digital asset trusts and has invested in over 200 companies within the crypto industry, including recognizable names such as blockchain analysis firm Chainalysis, stablecoin issuer Circle and digital asset exchange Kraken.

Cointelegraph contacted DCG for comment but did not receive a response.