A shareholder letter from May 2 says that Block, the payments company led by CEO Jack Dorsey, has started a dollar cost averaging (DCA) scheme to increase the amount of Bitcoin it holds.
Starting in April, Block has set aside 10% of its monthly gross profit from Bitcoin-related goods to buy more Bitcoin regularly. This plan is supposed to continue for the rest of 2024.
Dollar-cost averaging is a methodical way to spend. It involves putting a set amount of funds into an asset on a regular basis, no matter what the price of the asset is at the time. This approach is often used in markets that are very volatile because it lessens the effect of price changes.
Jack Dorsey’s Vision Block’s Commitment to Bitcoin Acceptance
Block’s move toward DCA is in line with the growing acceptance of Bitcoin as a financial option by the general public. In January, the Securities and Exchange Commission approved several Bitcoin exchange-traded funds, which is a big sign of this. This support for Bitcoin shows how committed Block is to the cryptocurrency.
“We believe the world needs an open protocol for funds, one that’s not owned or controlled by any single entity,” CEO Jack Dorsey said about the company’s goals. Our investment in Bitcoin is more than just a piece of technology; it’s an investment in a future where everyone has the power to make their own cash.
Even though Bitcoin is getting more attention, Dorsey stressed that less than 3% of Block’s resources are currently being used for Bitcoin-related projects. Still, the company has changed its earnings prediction. It now expects annual adjusted core earnings of at least $2.76 billion, which is more than the $2.63 billion it had predicted before.
This strategy move toward a portfolio focused on Bitcoin is in line with Block’s long-term goals. The company made a lot of noise in October 2020 when it bought 4,709 Bitcoins at an average price of $10,618 each. Later purchases in February 2021 added 3,318 BTC at a price of $51,236 per Bitcoin, which was a lot more than the original price.
Block said on March 31, 2024, that they owned 8,038 BTC worth $573 million, with paper gains of $233 million.
Even with these gains, Block’s shares have dropped 9% this year. This is because of rumours that Federal prosecutors are looking closely at the company’s internal compliance systems and how it handles transactions with countries that are under sanctions.
