$BTC 78305. In Block’s Q3 report, this business is no longer profitable: Bitcoin gross profit was $52 million, down by half year over year, with a gross margin of 2.88%, versus 5.15% a year ago.
Revenue was down 10.7% year over year. The company’s explanation was straightforward: it proactively lowered fees on some Bitcoin transactions on Cash App. Prices came down, but volume didn’t recover at all.
The real money came from another line item: a revaluation gain of $229.7 million on its Bitcoin investment in the third quarter—4.4 times the business’s gross profit. Buying and selling is no match for just sitting on your holdings.
$COINB reported the same trend in its Q3 results last week: transaction revenue fell 43.6%. Two companies selling the same thing, and both are making less money.
If the gross margin holds at 2.88% next quarter, then cutting fees to drive volume will have worked. If it falls below 2%, this business is just a way to attract users. Keep an eye on those two numbers.
A 2.88% gross margin, all thanks to the price of Bitcoin—that’s not a business anymore.
Would you buy the one that collects transaction fees, or the one that hoards Bitcoin?
Source: https://www.sec.gov/Archives/edgar/data/1512673/000162828026069513/q32026shareholderletter.htm
Revenue was down 10.7% year over year. The company’s explanation was straightforward: it proactively lowered fees on some Bitcoin transactions on Cash App. Prices came down, but volume didn’t recover at all.
The real money came from another line item: a revaluation gain of $229.7 million on its Bitcoin investment in the third quarter—4.4 times the business’s gross profit. Buying and selling is no match for just sitting on your holdings.
$COINB reported the same trend in its Q3 results last week: transaction revenue fell 43.6%. Two companies selling the same thing, and both are making less money.
If the gross margin holds at 2.88% next quarter, then cutting fees to drive volume will have worked. If it falls below 2%, this business is just a way to attract users. Keep an eye on those two numbers.
A 2.88% gross margin, all thanks to the price of Bitcoin—that’s not a business anymore.
Would you buy the one that collects transaction fees, or the one that hoards Bitcoin?
Source: https://www.sec.gov/Archives/edgar/data/1512673/000162828026069513/q32026shareholderletter.htm
