By Shariq Khan
(Reuters) - Square Inc (NYSE:SQ) raised the bets on bitcoin by investing $170 million more and Chief Executive Jack Dorsey promised on Tuesday to "double down" on the payment firm's commitment to the world's biggest cryptocurrency.
"The Internet needs a native currency, and we believe bitcoin is it," the longtime bitcoin enthusiast and chief executive of social media firm Twitter Inc (NYSE:TWTR) said.
Square bought 3,318 bitcoins in the fourth quarter, adding to the mainstream acceptance of the digital currency that has been winning support from several big investors.
"By us owning bitcoin, our incentives are aligned with skin in the game," Dorsey said on a post-earnings conference call with analysts.
Square has been involved with the currency for years and its Cash App, a payments service, has allowed users to trade it since 2018.
The app had three million active bitcoin customers in 2020, with a million new users buying the currency for the first time in January, the company said.
In October last year, Square bought about 4,709 bitcoins at an aggregate price of $50 million. Since then, the coin's price has scaled record highs, with Tesla Inc investing $1.5 billion and Bank of NY Mellon (NYSE:BK) Corp saying it will set up a unit to help its clients deal in digital assets.
In its latest purchase, Square paid more than $51,200 per bitcoin, according to Reuters calculations. However, the spot price of the currency on Tuesday crashed more than 13% to below $47,000 amid a broader market downturn.
Shares of the company fell about 5% after the bell on Tuesday, extending losses booked during the session.
Square's revenue in the quarter more than doubled to $3.16 billion, which the company said was helped by bitcoin purchases on Cash App.
Square's gross profit on bitcoin trading rose 13 times in the fourth quarter, but it was still just 2% of its revenue from the cryptocurrency. Its bitcoin holdings are now worth about 5% of its $4.4 billion cash pile.
The company posted adjusted earnings of 32 cents per share, beating market expectation of 24 cents.