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 transact in bitcoin through Cash App in 2020 and 1 million who were new to bitcoin in January [2021],” Ahuja said on “Squawk Alley,” just a day after Square announced it bought more of the world’s biggest 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 spike in bitcoin interest among Cash App users coincided with a continued upside move in the digital coin last month. On Jan. 1, bitcoin traded below $30,000 per unit. It hit $40,000 apiece for the first time about a week later, although it mostly retreated in value during the second half of January.
Bitcoin topped $58,000 for an all-time high Sunday after making its first trip above $50,000 last week. Even with solid gains Wednesday, a big sell-off earlier this week took bitcoin below $50,000. However, bitcoin is still up more than 70% year to date and over 400% in the last 12 months.
Square began allowing nearly all its users to buy and sell bitcoin through its payment app in January 2018, after a more limited rollout in the preceding fall. Its initial entrance in the crypto market came as bitcoin was in the middle of a major upswing in 2017, hitting what was then a record high of nearly $20,000 that December. Then came a major backslide throughout 2018 in what’s become known as the “crypto winter,” when bitcoin lost 80% of its value.
But in 2020, bitcoin began a massive rally as a number of high-profile investors touted the digital token as a strong inflation hedge and established companies like PayPal moved in.
Square itself bought $50 million worth of bitcoin in October using existing cash on its balance sheet. On Tuesday, the Jack Dorsey-led company announced it bought an additional $170 million worth of bitcoin. Both bitcoin purchases amount to about 5% of the company’s cash holdings, Ahuja told CNBC.
Square now owns 8,027 bitcoins in total, which are worth around $400 million based on Wednesday’s price. Dorsey, one of bitcoin’s best-known proponents, once predicted it would eventually become the “single currency” of the internet. He also runs Twitter.
“We feel that bitcoin is aligned with our purpose, which is economic empowerment,” Ahuja said, explaining Square’s investments. “Economic empowerment is about bringing access to financial tools more broadly, including to people who haven’t had it before. We think bitcoin is a way that could enable that for the future.”
Crypto bulls have likened bitcoin to “digital gold,” saying that because its supply is capped at 21 million units, it can be a powerful store of value. There are around 18.64 million bitcoins in circulation currently, according to Coindesk. New bitcoins come into the market as a reward for so-called miners, who use high-powered computers to verify transactions across the decentralized network.
Volatile trading has been a hallmark of bitcoin, and some crypto skeptics point to those sizable fluctuations as a cause for concern when a company invests some of its balance sheet cash into the digital asset.
“We think about the long-term arc,” Ahuja said, when asked about the volatility. “Overall, the investment we made so far is 5% of our cash, and the business we have related to bitcoin through Cash App is about 5% of our gross profit. We’re going to evaluate this investment on an ongoing basis. We’ll be dynamic. We’ll respond to the market environment, but ultimately that long-term vision is what we’re investing into.”
Other companies who have moved into crypto recently include Tesla, which earlier this month announced it bought $1.5 billion worth of bitcoin. Bank of New York Mellon, the oldest bank in the U.S., said on Feb. 11 that it plans to launch a digital asset division later this year.
Square, which has risen 195% in the past 12 months, fell 7.51% Wednesday to $237.32 per share.