Jack Dorsey, co-founder of Twitter Inc., speaks during the Bitcoin 2021 conference in Miami, Florida, US, on Friday, June 4, 2021.
Eva Marie Uzcategui | Bloomberg | Getty Images
During the crypto-crazy summer of 2021, when meme currencies like dogecoin and Shiba Inu were booming alongside Bitcoin and Ethereum, Square founder Jack Dorsey announced that his payments company would start a new business unit, with the goal of “making it easier to create.” Non-custodial, permissionless and decentralized financial services.”
“Our primary focus is #Bitcoin,” Dorsey announced on Twitter. The business unit name will be TBD.
In December of that year, Dorsey went one step further, changing the name of Square Inc. To Block, which is a reference, he said, to a number of things, including blockchain, the technology that underpins Bitcoin. Square Crypto business became known as Spiral.
Three years later, Dorsey was in decline.
on roadblockOn Thursday's third-quarter earnings call, CFO Amrita Ahuja said Block “has made some recent decisions regarding some of our emerging initiatives” and is “scaling back our efforts to be determined.”
Block continues to own a large amount of Bitcoin On its balance sheet, the current value of its holdings has swelled to $630 million. The company said it will invest in the bitcoin mining initiative as well as Bitkey, its bitcoin wallet, while continuing to allow users to purchase bitcoin through the Cash App.
It's a noticeable change in tune.
TBD is designed to be a Block platform for developers. Block called it Web5 and said the mission was to create a more decentralized, secure and private internet. Web5 “will likely be our most important contribution to the Internet,” Dorsey said in a tweet in mid-2022.
Square's five-year stock chart
But Wall Street's view of cryptocurrencies has begun to deteriorate significantly. With inflation rising in 2022 and interest rates rising, shareholders demanded faster returns on their investments. After peaking in 2021, the bloc's shares lost more than 80% of their value before hitting bottom in October 2023.
Block said in late 2023 that it would reduce its headcount — then about 13,000 employees — by up to 1,000 by the end of 2024. Block laid off the majority of TBD's employees in recent weeks. In its third-quarter shareholder letter, Block said it was “reducing” its investment in Tidal, the music streaming service founded by Jay-Z, after spending about $300 million on a majority stake in the company in 2021.
An analyst asked Dorsey on a call Thursday about the company's current Bitcoin strategy.
“What we're focused on in terms of our overall bitcoin strategy is making it more accessible, making sure that more people can access bitcoin and buy and sell bitcoin, but also send it peer-to-peer,” Dorsey said. .
Dorsey added that he wants “the Internet to have a local currency,” because that would allow Block to move money faster and offer a cash app and other products in more markets.
A Block spokesperson reiterated the company's public statement and pointed to Dorsey's comments from the earnings call.
What has become clear is that Dorsey can only do so much in the cryptocurrency space while trying to appease the more discerning Wall Street. Block shares were down nearly 1% at market close on Friday, after the company reported revenue that missed estimates and issued overall profit guidance that was weaker than some analysts expected.
In his 1,400-word letter to shareholders, Dorsey focused entirely on the company's lending offerings to small businesses. A big part of that is the buy now, pay later product of Afterpay, which Block acquired for $29 billion in 2021.
Dorsey did not mention cryptocurrencies or Bitcoin once.
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