Jack Dorsey’s Bitcoin bet turns sour

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While Elliott’s campaign failed in the short term, Dorsey’s interest in Bitcoin intensified. He changed his Twitter bio section – a heavily guarded piece of internet territory, to simply “#Bitcoin”.

As 2020 proved to be a breakthrough year for the currency, rising 200% amid a boom in home trading, Square has become a face on Wall Street. He revealed that he spent $50 million on 4,709 Bitcoin, making him the most prominent company to park his money in cryptocurrency. Tesla would follow his lead later that year.

“We believe bitcoin has the potential to be a more ubiquitous currency in the future,” Square chief financial officer Amrita Ahuja said at the time.

It was the clearest sign yet that Square was tying its future more closely to Bitcoin. Since then, he has dedicated more of his savings to it and unveiled a series of initiatives that he says are designed to make the controversial cryptocurrency more accessible – and acceptable.

He funded research into Bitcoin’s carbon footprint, saying that, contrary to widespread criticism of the energy-intensive asset, it could incentivize investment in renewable energy, and said he wanted to develop technology to enable more people to more easily access “mining” – the process of creating new bitcoins that currently requires powerful computer systems.

In a recent note to investors, Barclays analysts wrote that “crypto is becoming an increasingly important part of Square’s narrative.”

They added, “The company’s various crypto businesses…point to a long-term strategy that assumes Bitcoin will be much more widely adopted in the future as an everyday spending instrument and financial services tool.”

Dorsey has also become more outspoken on a personal level, battling venture capitalists who back rival cryptocurrencies and creating a fund to defend Bitcoin developers from lawsuits.

Yet Square has at times seemed to play down its connection to Bitcoin. The company has pursued other initiatives, such as buying music streaming service Tidal run by rapper Jay-Z, who now sits on the company’s board, and acquiring company Afterpay.

People close to the company point out that its daily bread – letting small businesses accept payments and allowing consumers to send money through its cash app – is also booming. While Bitcoin trading accounted for nearly half of the company’s revenue in the third quarter of the year, its profit share was well below around 4%.

And in stark comparison to Facebook, which changed its name to “Meta” in a full-throated tilt towards the “metaverse” of virtual worlds, Square was much more ambiguous about its new name, saying “Block” could mean a number of things.

Former executives say Dorsey refers to the company as the “bank of the future” – not necessarily the one that’s all-in on cryptocurrency.

But it can become more difficult to divorce the two. A month ago, Dorsey tweeted that Bitcoin would replace the US dollar, a stance that suggests it is nothing if not everything.

Block’s share price surge during the pandemic – its value surpassed $100 billion last year – has loosely followed the cryptocurrency. The shareholders were happy enough to be on board to go up. If its recent crash continues, Dorsey could find itself pining for days of running Twitter.

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