Institutional cryptocurrency adoption has been on the rise this year, with companies shifting more of their assets into crypto. The latest firm to jump on this train is Square, the payment processor headed by Twitter founder Jack Dorsey.
Betting More on Bitcoin
Earlier today, the Silicon Valley firm announced that it had acquired 4,709 BTC, worth about $50 million at press time. Describing the move, Square explained its belief that cryptocurrencies are a tool for economic empowerment that allows everyone to participate in a borderless economic system.
Considering that the firm focuses on improving financial inclusion as well, the crypto purchase was merely in line with it. The firm added that the Bitcoins purchased represented about one percent of its total asset at the end of the second quarter.
Square has been one of the companies to benefit immensely from its involvement with cryptocurrencies. The financial services firm announced in Q2 that it made $875 million in revenue from Bitcoin trading on Cash App, its crypto-focused subsidiary.
The quarterly performances showed a 600 percent increase in revenues and a 710 percent surge in gross profit over the same period in 2019. Gross profits also surged 150 percent compared to the year’s first quarter. Bitcoin-related business represented approximately 2.85 percent of the company’s entire pross profit for the quarter, which stood at $597 million.
However, the Cash App Bitcoin business also soaked up $858 million in quarterly expenses, bringing the entire division’s profit to $17 million. Active users on the Cash App now amount to 30 million as well.
The Battle of the Whales
The Silicon Valley firm is joining an extensive list of firms to convert significant portions of their assets to Bitcoin. Most prominent has been business intelligence solutions provider MicroStrategy.
Based in Virginia, MicroStrategy has been on a purchasing spree over the past few weeks. In July, the tech giant confirmed in a press release that it had switched its primary asset base to Bitcoin, purchasing21,454 BTC for $250 million.
The company told the Securities and Exchange Commission (SEC) days later that it could swill purchase even more of the asset, and it made good on that promise when chief executive Michael Saylor announced the acquisition of an additional 16,796 BCT for $175 million. With about $425 million now in Bitcoin, MicroStrategy has put itself in an excellent position to hedge with the asset.
However, the primary institutional driver remains Grayscale Investments. Grayscale is the largest crypto-focused asset management firm globally, with over $5 billion in assets under management. Two weeks back, data from crypto analytics firm bybt.com confirmed that it had added another 17,000 BTC to its reserves, at a price of about $186 million.
Grayscale now holds a total of 449,900 coins under management – worth about $4,9 billion when taking one BTC to be worth $10,890. This effectively means that the company holds 2.4 percent of the total Bitcoin market capitalization.
The total supply of Bitcoins has a cap of 21 million. With a circulating supply of 18.5 million, only about 2.5 million BTC tokens left to mine. Even if Grayscale stopped its purchasing spree today, it would still control about 2 percent of the total BTC supply.