Jack Dorsey’s financial services and digital payments company Block Inc. announced that 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 results for the first quarter of 2024, which demonstrated substantial profits from its Bitcoin operations.
Dorsey Block Goes DCA in 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 cost averaging (DCA) program could allow the company to invest around $24 million in BTC within a year. This initiative aims to strengthen the company’s BTC holdings, strategically buying into the market in a way that minimizes the impact on the price of Bitcoin.
Jack Dorsey explained the company’s new investment strategy in a recent article on X, stating: “Block consumes Bitcoin every month. here’s how your business 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 companies 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 for an overall price of $50 million. The company then purchased an additional 3,318 BTC in February 2021 for $170 million. As of March 31, 2024, Block held approximately 8,038 BTC, which represented approximately 9% of its total cash and tradable 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 trade execution over a short two-hour window, taking advantage of periods of high liquidity and low price volatility.
The company’s strategy reflects its confidence 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.
In April 2024 alone, Block executed $4.4 million in purchases under the DCA program. 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 appwhich allows customers to buy and sell Bitcoin, and To be determinedan open development platform aimed at decentralizing financial services.
On the regulatory front, Block has adapted to the latest accounting standards for digital assets. The adoption of Financial Accounting Standards Board Accounting Standards Update No. 2023-08, which took effect in December 2023, requires Bitcoin investments to be revalued at fair value, with changes in value recognized in net income. This reflects a significant change from previous accounting practices, where BTC was treated as an intangible asset with an indefinite life.
The document also highlights the company’s rigorous approach to digital asset custody. Since beginning its Bitcoin operations, Block has developed a comprehensive storage infrastructure, focused on cold storage solutions backed by hardware security modules (HSM). This setup ensures that private keys, essential for accessing BTC holdings, are securely managed and protected from unauthorized access.
At press time, BTC was trading at $59,581.
Featured image from BBC, chart from TradingView.com
