Cash App, the mobile payment service developed by Square, has reported a significant surge in revenue from Bitcoin transactions in the first quarter of 2023. The company’s latest earnings report revealed that Cash App Bitcoin revenue rises to $2 billion in Q1, more than doubling the $923 million reported for the same period last year.
The increase in Bitcoin revenue is attributed to the growing popularity of the cryptocurrency among retail investors, as well as Cash App’s efforts to make it easier for users to buy, hold, and sell Bitcoin. Square CEO Jack Dorsey has been a vocal advocate of Bitcoin and has stated that the cryptocurrency has the potential to become the world’s dominant currency.
Cash App’s Bitcoin revenue doubles in Q1 2023
Cash App’s Bitcoin revenue is derived primarily from fees charged for Bitcoin transactions. The company charges a 1.76% fee for Bitcoin purchases, while sales of the cryptocurrency incur a 1.63% fee. The revenue generated from these fees represents a significant portion of Cash App’s overall revenue.
The popularity of Cash App’s Bitcoin service has also been boosted by the increasing adoption of cryptocurrencies by mainstream financial institutions. In recent months, several major banks and asset managers have announced plans to offer Bitcoin and other cryptocurrencies to their clients. This has helped to legitimize the cryptocurrency market and attract more retail investors.
Factors contributing to Cash App’s Bitcoin revenue growth
Despite the surge in Bitcoin revenue, Cash App’s overall revenue growth has slowed in recent quarters before Cash App Bitcoin revenue rises to $2 billion. The company’s Q1 revenue of $4.6 billion represents a 33% increase year-over-year, down from the 50% growth reported in Q4 2022. Cash App’s user base also grew at a slower rate, with 39 million monthly active users reported in Q1, up from 36 million in the previous quarter.
In response to the slower growth, Square has announced plans to expand its services beyond mobile payments. The company recently acquired the Australian buy now, pay later firm Afterpay for $29 billion, a move that will allow it to offer installment payment options to its users. Square is also exploring the development of other financial products and services, such as savings accounts and investment products.
Slower overall revenue growth prompts Square to expand services
Cash App’s success with Bitcoin has also prompted other mobile payment services to enter the cryptocurrency market. PayPal’s Venmo app recently launched a feature that allows users to buy, hold, and sell cryptocurrencies, including Bitcoin, Ethereum, and Litecoin. Venmo’s cryptocurrency service has been met with strong demand, with the company reporting $1.8 billion in cryptocurrency transactions in Q1.
Regulatory Scrutiny of the cryptocurrency market
The increasing adoption of cryptocurrencies by mainstream financial institutions has also led to greater regulatory scrutiny. In the US, the Securities and Exchange Commission (SEC) has been cracking down on cryptocurrency exchanges and initial coin offerings (ICOs) that violate securities laws. The agency has also expressed concerns about the lack of investor protection in the cryptocurrency market.
Despite these challenges, the cryptocurrency market continues to grow at a rapid pace. Bitcoin, the largest cryptocurrency by market capitalization, has seen its price rise from around $10,000 in October 2022 to over $80,000 in May 2023. Other cryptocurrencies, such as Ethereum and Binance Coin, have also experienced significant price increases.
In conclusion, Cash App Bitcoin revenue rises to $2 billion in the first quarter is a testament to the growing popularity of cryptocurrencies among retail investors. The surge in Bitcoin revenue has also prompted other mobile payment services to enter the cryptocurrency market. However, as the cryptocurrency market continues to grow, it will face increasing regulatory scrutiny and investor protection concerns.