Jack Dorsey’s financial services and digital payments company, Block Inc., announced it will begin investing 10% of its monthly Bitcoin-related gross profits into BTC purchases. This announcement was made following the release of Block’s first-quarter earnings for 2024, which demonstrated substantial profits from its Bitcoin operations.
Dorsey’s Block Will DCA Into Bitcoin
Block reported Bitcoin-related gross profits amounting to $80 million in the first quarter alone. If this trend continues, the implementation of the new dollar cost averaging (DCA) program could see the company investing approximately $24 million in BTC within one year. This initiative aims to enhance the company’s BTC holdings, strategically buying into the market in a manner that minimizes the impact on Bitcoin’s price.
Jack Dorsey elaborated on the company’s new investment strategy in a recent post on X, stating, “Block is DCA’ing Bitcoin every month. here’s how your company can do it too.” He also shared a detailed document titled “Bitcoin Blueprint For Corporate Balance Sheets,” which serves as a comprehensive guide for other corporations interested in integrating BTC into their financial strategies.
According to the document, Block, formerly known as Square, began its substantial acquisitions in October 2020, purchasing 4,709 BTC at an aggregate price of $50 million. The company later bought an additional 3,318 BTC in February 2021 for $170 million. As of March 31, 2024, Block holds approximately 8,038 BTC, representing about 9% of its total cash and marketable securities.
Block’s method involves purchasing Bitcoin through over-the-counter transactions with a liquidity provider, using a Time-Weighted Average Price (TWAP) to minimize price slippage. This process is designed to optimize the trade execution over a short, two-hour window, taking advantage of periods with high liquidity and low price volatility.
The company’s strategy reflects its belief in BTC as a tool for global economic empowerment. “We view Bitcoin as an instrument of global economic empowerment; it is a way for individuals around the world to participate in a global monetary system and secure their own financial future,” the document states.
For April 2024 alone, Block executed purchases amounting to $4.4 million under the DCA scheme. Additionally, Block’s involvement in BTC extends beyond investments. The company’s ecosystem includes a range of BTC-related products and services such as Cash App, which allows customers to buy and sell Bitcoin, and TBD, an open developer platform aimed at decentralizing financial services.
On the regulatory front, Block has adapted to the latest accounting standards for digital assets. The adoption of the Financial Accounting Standards Board’s Accounting Standards Update No. 2023-08, which came into effect in December 2023, requires that Bitcoin investments be re-measured to fair value, with changes in value recognized in net income. This reflects a significant shift from earlier accounting practices, where BTC was treated as indefinite-lived intangible assets.
The document also highlights the company’s rigorous approach to the custody of digital assets. Since the inception of its Bitcoin operations, Block has developed a comprehensive infrastructure for storage, centered around cold storage solutions backed by Hardware Security Modules (HSMs). This setup ensures that private keys, essential for accessing BTC holdings, are securely managed and insulated from unauthorized access.
At press time, BTC traded at $59,581.
Featured image from BBC, chart from TradingView.com
