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Block’s Bitcoin Ecosystem gross profit fell 31% in Q2

Block attributed the decline to lower fees on certain Cash App bitcoin transactions and to bitcoin trading dynamics, while Bitcoin revenue declined about 13% to $1.894 billion.

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Block reported that its Bitcoin Ecosystem gross profit fell 31% year over year to $72 million in the second quarter, even as Block’s total gross profit rose 25% to $3.166 billion, according to the company’s Q2 shareholder letter cited by CryptoSlate.

Bitcoin Ecosystem revenue declined about 13% to $1.894 billion from $2.172 billion a year earlier. Based on the filing’s revenue and cost figures, the category’s implied gross margin narrowed to about 3.82% from 4.84%, a compression of roughly 102 basis points, with gross profit per $1,000 of revenue dropping to about $38.20 from $48.40.

CryptoSlate reports that Block linked the gross-profit decline to two factors, a strategic decision to reduce the fee charged on certain Cash App bitcoin transactions and bitcoin trading dynamics. The outlet notes that Block did not quantify how much each factor contributed, and a separate Feb. 9 Cash App announcement lowered transaction fees and removed fees and spreads for bitcoin buys over $2,000.

Block also recorded an $88.474 million bitcoin remeasurement loss versus a $212.165 million gain a year earlier, a non-operating fair value effect recorded separately from the Bitcoin Ecosystem revenue, costs, and gross profit. CryptoSlate says combining the remeasurement swing with the category result would overstate the operating damage because the items were accounted for separately.

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