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The fintech giant Square announced on Thursday morning that it bought 4,709 Bitcoins for the price of $50 million, noting that the purchase amounted to 1% of the company’s total assets.

The announcement offered few details about how it purchased the Bitcoins or its motivation for doing so, beyond stating that cryptocurrency is a form of “economic empowerment and provides a way for the world to participate in a global monetary system.”

Such language is consistent with Square CEO Jack Dorsey’s recent advocacy for digital currencies like Bitcoin, which are controlled by no central authority, and which create a tamper-proof record of transactions.

Further clues to Square’s motivation, however, can be discerned in a white paper the company published quietly this month. In a section of the white paper titled “Accounting,” Square notes that the $50 million in Bitcoin will likely be classified as “Other non-current assets.”

The upshot of this classification is that Square will not be using the Bitcoin as part of its operations (the company has a lively trade letting customers buy Bitcoin through its Cash App) but treating it as a long term investment.

Square is the second publicly traded company to make such a bet, following a $250 million Bitcoin purchase by MicroStrategy, a Virginia-based software intelligence firm. In both cases, the purchases amount to a long-term bullish bet on Bitcoin.

The Square white paper also contains other interesting nuggets of information about how the company acquired the Bitcoin and where it will store it. The paper notes it bought the 4,709 Bitcoins over a 24 hour period using a so-called “over-the-counter” (OTC) broker, which specialize in large, discreet transactions. Square doesn’t specify which OTC service it used, but points to a list of brokers it’s used in the past that cites Circle, ItBit, Genesis and Cumberland.

As for storing the Bitcoin, the white paper notes Square uses “cold storage”—a way to protect digital currency from hackers by storing it offline. Square says it is relying on its own cold storage technology, as opposed to third part custody providers like Coinbase or Anchorage.

Square’s $50 million longterm investment comes as its day-to-day Bitcoin business has been booming. When it first offered Bitcoin to Cash App customers in 2018, the service was small and money-losing. But, as its Q2 financial reports show, Square’s Bitcoin operations—which involve sourcing Bitcoin from third party providers—are now profitable and growing fast:


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Square did not immediately respond to a request for further details about the Bitcoin purchase announcement.

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