Block reports Bitcoin gross profit drop and raises forecast

Block’s bitcoin ecosystem gross profit fell 31% year over year to $72 million in the second quarter, as the company reduced fees on certain Cash App bitcoin transactions and faced slower bitcoin trading activity. The decline came even as Block raised its full-year 2026 gross profit forecast to $12.51 billion, pointing to strength in its larger Cash App and Square businesses.

Shares initially rose as much as 4.5% in after-hours trading following the earnings release before reversing course. They were last down more than 2% at $84.20, suggesting that the bitcoin segment’s weaker profitability and the effect of unrealized losses on net income outweighed the upgraded company-wide outlook for some traders.

Block reported total gross profit of $3.17 billion for the quarter, up 25% from a year earlier. Cash App accounted for $1.97 billion, a 31% increase, while Square generated $1.16 billion in gross profit, up 13%. Those results place the bitcoin business as a relatively small contributor to Block’s overall profits, despite its large revenue base.

Lower fees cut into bitcoin segment margins

Bitcoin ecosystem revenue reached $1.89 billion, down 13% from $2.17 billion in the same quarter a year earlier, according to Block’s quarterly results. Revenue increased 5% from the first quarter, but the improvement did not translate into a comparable gain in profit.

Cash App contributed $1.81 billion of the segment’s revenue. Block attributed the year-over-year drop in bitcoin ecosystem gross profit to lower fees on selected bitcoin transactions and reduced bitcoin trading activity during 2026.

The figures show the difference between revenue generated by bitcoin buying and selling and the income Block retains after related costs. A company can process substantial transaction volume while producing relatively modest gross profit if fees are reduced or trading demand softens.

Block’s decision to lower certain fees may support Cash App’s appeal among customers who regularly purchase or transfer bitcoin, but it also leaves the segment more dependent on transaction volumes. When bitcoin trading slows, a lower-fee model has less room to offset reduced activity.

Bitcoin price decline weighs on reported income

Block also recorded an $88.5 million unrealized loss on its bitcoin holdings during the quarter. A year earlier, it booked a $212.2 million unrealized gain. The change was a major factor behind a steep fall in net income, which declined to $89 million from $538 million in the prior-year period.

The loss was a paper loss, meaning Block did not necessarily sell the bitcoin involved. It reflects a decline in the market value of the company’s holdings during the reporting period and can reverse if bitcoin’s price recovers. It nonetheless affects earnings reported under applicable accounting treatment.

As of May 8, Block held 9,032 BTC in its corporate treasury, up roughly 35 BTC from the 8,997 BTC it reported at the end of the first quarter. At current prices, the holdings were worth more than $586 million.

That treasury position gives Block direct exposure to bitcoin price movements beyond the transaction activity occurring inside Cash App. The company’s operating performance can therefore remain strong while reported net income becomes more volatile when bitcoin’s market value shifts sharply.

USDC support extends Cash App’s payment options

During the quarter, Cash App added support for USDC, the dollar-pegged stablecoin, enabling stablecoin transactions across multiple blockchains. The addition gives the app a digital-dollar payment option whose value is designed to remain close to $1, unlike bitcoin, whose price can move substantially over short periods.

The USDC feature expands Block’s crypto offering beyond bitcoin trading and custody. Stablecoin transfers could be more practical for users seeking to move value without taking immediate exposure to bitcoin price changes, particularly in payments or transfers where a predictable dollar amount matters.

The move also connects Cash App to a growing part of the digital-asset market that has increasingly focused on settlement and payments rather than speculative trading. Block did not provide financial results for USDC activity, and the product is unlikely to have materially affected the quarter’s reported figures so soon after its introduction.

Higher full-year target rests on Cash App and Square growth

Block raised its 2026 gross profit forecast to $12.51 billion, which it described as representing 21% annual growth. The guidance increase indicates management expects the company’s primary payment and financial-services platforms to continue expanding despite a weaker bitcoin contribution.

Cash App’s 31% gross-profit growth was particularly important to that outlook. The platform’s performance shows that its wider financial ecosystem, rather than bitcoin transactions alone, is driving its profit expansion. Square’s 13% increase adds a second source of growth through its merchant-facing payments and software services.

The quarter leaves Block balancing two different crypto strategies. Lower bitcoin transaction fees may help retain and attract users but reduced the segment’s profitability during a period of slower trading. USDC support, meanwhile, gives Cash App another route into blockchain-based transfers that is less tied to bitcoin’s daily price movements.

For Block, the raised annual forecast suggests that the bitcoin slowdown has not derailed its operating trajectory. The market reaction showed that traders remain focused on the cost of maintaining crypto exposure: weaker transaction economics in the bitcoin segment and earnings volatility from the company’s own BTC treasury.