During the crypto-crazy summer of 2021, when memecoins like Dogecoin and Shiba Inu skyrocketed alongside Bitcoin and Ethereum, Square founder Jack Dorsey founded announced that his payments company is launching a brand new business unit with the aim of “simplifying the creation of non-neglected, permissionless and decentralized financial services.”
“Our main focus is on #BitcoinDorsey announced on Twitter. The business entity name would be TBD.
In December of that year, Dorsey went one step further: Change of name from Square Inc. to Blocka reference, 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.”
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 said in late 2023 that this would happen reduce the number of employees – at that time around 13,000 employees – by the end of 2024 even by 1,000. Block has laid off the majority of TBD employees in recent weeks. And in its third-quarter shareholder letter, Block said it is “reducing” 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.
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 might allow Block to maneuver money faster and offer Cash App and other products in additional markets.
A Block spokesperson reiterated the corporate's public statement and referenced Dorsey's comments from the conference call.
It's turn out to be 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 corporate reported revenue that fell wanting 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 corporate's loan offerings for small businesses. A good portion of that 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 make sure profit decline
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