Jack Dorsey, co-founder of Twitter Inc., speaks during the Bitcoin 2021 conference in Miami, Florida, USA, on Friday, June 4, 2021.
Eva Marie Uzcategui | Bloomberg | Getty Images
During the crypto-crazy summer of 2021, when memecoins like Dogecoin and Shiba Inu skyrocketed alongside Bitcoin and Ethereum, Square founder Jack Dorsey announced that his payments company would be launching a new business unit with the goal of “creating simplify”. non-custodial, permissionless and decentralized financial services.”
“Our primary focus is #Bitcoin,” Dorsey announced on Twitter. The business entity name would be TBD.
In December of that year, Dorsey went a step further and changed Square Inc.'s name to Block, a nod, he said, to a number of things including blockchain, the technology that underlies Bitcoin. The Square Crypto business became known as Spiral.
Three years later, Dorsey is in retreat.
To blockIn Thursday's third-quarter earnings call, CFO Amrita Ahuja said Block “has made some recent decisions related to some of our new initiatives” and will “discontinue our TBD efforts.”
Block continues to own a significant amount Bitcoin on its balance sheet, bringing the current value of its holdings to $630 million. And the company said it will invest in a Bitcoin mining initiative as well as Bitkey, its Bitcoin wallet, and will continue to allow users to purchase Bitcoin through Cash App.
It's a remarkable change of mood.
TBD was designed as a blockchain platform for developers. Calling it Web5, Block said the mission was to create a more decentralized, secure and private internet. Dorsey said in a tweet in mid-2022 that Web5 “will likely be our most important contribution to the Internet.”
Stock chart iconStock chart icon
Square's five-year stock chart
But Wall Street's opinion on crypto began to deteriorate dramatically. With inflation soaring in 2022 and interest rates rising, shareholders demanded faster returns on their investments. After peaking in 2021, Block shares lost more than 80% of their value before bottoming out in October 2023.
Block announced at the end of 2023 that it would reduce its workforce – around 13,000 employees at the time – by up to 1,000 by the end of 2024. Block has laid off the majority of TBD employees in recent weeks. And in its third-quarter shareholder letter, Block said it would “scale back” its investment in Tidal, the music streaming service founded by Jay-Z, after spending about $300 million in 2021 for a majority stake in the company had issued. Tidal was part of TBD.
Dorsey was asked by an analyst on Thursday about the company's current Bitcoin strategy.
“Our overall strategy for Bitcoin is focused on making it more accessible and ensuring that more people can access Bitcoin, buy it, sell it, but of course send it peer-to-peer,” Dorsey said.
Dorsey added that he wants “the internet to have its own currency” because that would allow Block to move money faster and offer Cash App and other products in more markets.
A Block spokesperson reiterated the company's public statement and referenced Dorsey's comments from the conference call.
It's become clear that Dorsey has limited options with crypto as he tries to appease a more demanding Wall Street. Shares of Block were down about 1% at Friday's close after the company reported revenue that fell short of estimates and issued weaker gross profit guidance than some analysts had expected.
In his 1,400-word letter to shareholders, Dorsey focused exclusively on the company's loan offerings for small businesses. A significant portion of this is Afterpay's buy now, pay later product, which Block acquired for $29 billion in 2021.
Dorsey didn't mention crypto or Bitcoin once.
REGARD: Block and confirm profit decline
Comments are closed.