Square Inc. announced on October 8, 2020, that it has purchased approximately 4,709 bitcoins at an aggregate purchase price of $50 million. This investment represents about 1% of the company's total assets as of the end of the second quarter of 2020. The NYSE-listed company (ticker: SQ), with a market capitalization of roughly $81 billion, provides software and hardware payment solutions and operates globally.
Strategic Rationale: Bitcoin as Economic Empowerment
In its official statement, Square said: "We believe that cryptocurrency is an instrument of economic empowerment and provides a way for the world to participate in a global monetary system, which aligns with the company's purpose." Chief Financial Officer Amrita Ahuja added: "We believe that bitcoin has the potential to be a more ubiquitous currency in the future. As it grows in adoption, we intend to learn and participate in a disciplined way. For a company that is building products based on a more inclusive future, this investment is a step on that journey."
Cash App's Crypto Journey and Milestones
Square's mobile payment service, Cash App, launched bitcoin trading in 2018. In Q2 2020, Cash App's bitcoin revenue surged 600% year-over-year, while profits jumped 711%. The company also established an independent team, Square Crypto, in 2019 to focus on open-source bitcoin contributions. More recently, Square launched the non-profit Cryptocurrency Open Patent Alliance (COPA) to foster crypto innovation and open access to patented crypto technologies.
Market Reaction: Microstrategy Leads, Corporate FOMO Intensifies
Square's bitcoin purchase follows a similar move by Nasdaq-listed Microstrategy, which has invested a total of $425 million in bitcoin and designated it as its primary treasury reserve asset. Microstrategy CEO Michael Saylor tweeted: "Bitcoin makes a fine treasury reserve asset. My admiration goes out to Jack and the Square team for leading the way." Saylor explained that after evaluating fiat, bonds, stocks, commodities, and other assets, he settled on bitcoin as the ideal long-duration asset.
The crypto community reacted positively to Square's move, with many expecting additional large companies to follow suit. Analysts note that two publicly traded firms with a combined market cap exceeding $100 billion now hold significant bitcoin positions, signaling a substantive shift toward institutional crypto allocation.