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BTC TLDR
Revenue fell and profit margins narrowed.
Reason for the decline
In the second quarter, Block's total gross profit increased 25% to US$3.166 billion.
Gross profit for the Bitcoin ecosystem fell 31% to US$72 million, the only category to shrink.
Bitcoin ecosystem revenue fell approximately 13% to US$1.894 billion.
Block blamed the decrease in Bitcoin fees on Cash App and changes in transaction dynamics, but did not provide specific figures.
Block also reported a bitcoin remeasurement loss of US$88.474 million, compared to a gain of US$212.165 million in the same period last year.
Block released its second-quarter earnings this week. The results showed that the payment company's performance was mixed.
The company's overall gross profit increased by 25% to US$3.166 billion.
But part of the business has not followed this trend.
Block's Bitcoin ecosystem gross profit fell 31% year-on-year to US$72 million.
Among Block's three business segments, this is the only one that has shrunk. Commercial empowerment gross profit increased by 18%, and financial solutions gross profit increased by 43%.
Falling revenue and narrowing profit margins
Revenue from the Bitcoin ecosystem also fell. It fell to US$1.894 billion from US$2.172 billion in the same period last year, a decrease of approximately 13%.
Gross profit margin for this category also narrowed, from 4.84% to approximately 3.82%, a decrease of approximately 102 basis points.
Simply put, for every US$1000 in Bitcoin revenue, Block earns approximately US$38.20 in gross profit, down from US$48.40 in the same period last year.
In terms of amount, revenue decreased by approximately US$278 million, and gross profit decreased by approximately US$33 million.
Reasons for the decline
Block pointed out two reasons. One is to decide to reduce the handling fees for Bitcoin transactions on some Cash Apps.
Another reason was simply described as Bitcoin transaction dynamics. Block did not explain this statement with numbers.
The company did not specify the specific impact of each factor on the decline. The overall decline cannot be entirely attributed to the reduction in fees.
Cash App announced a reduction in fees in February, completely eliminating fees and price differences for Bitcoin purchases above $2000.
There was no deadline set for that February announcement. Block's second-quarter filing mentioned reduced fees for certain transactions, a broader statement than the February offer.
Block reported that Cash App had 59 million monthly active trading users in June. The document did not say how many of those users purchased Bitcoin.
There is no data in the document on Bitcoin transaction volume or fee income per transaction. Therefore, it is impossible to determine whether higher transaction volume offset the impact of lower fees.
Block also separately recorded a bitcoin remeasurement loss of US$88.474 million. In the same period last year, revenue of US$212.165 million was recorded under the same indicator.
The total amount of this change is approximately $300.639 million. This number is calculated separately from revenue and gross profit data for the Bitcoin ecosystem.
The remeasurement loss reflects a change in the value of Bitcoin held on Block's balance sheet, not the same as a decline in gross profit for the Bitcoin ecosystem.
Block has not yet released the latest data on the number of Bitcoin transactions. The latest public data still comes from this week's second-quarter shareholder letter.
