Jack Dorsey’s Block moves to dollar cost averaging for Bitcoin investments

Payments company Block, led by CEO Jack Dorsey, has launched a dollar cost averaging (DCA) program to expand its Bitcoin holdings, according to a May 2 shareholder letter.

Starting in April, the company is allocating 10% of its monthly gross profit to purchasing additional Bitcoin from Bitcoin-related products. The strategy is planned to continue for the remainder of 2024.

Dollar-cost averaging is an investment strategy that involves investing a fixed dollar amount in a particular asset at regular intervals, regardless of the asset’s current price. This method is often used to reduce the effects of price volatility.

The move by Block Inc. follows the growing acceptance of Bitcoin as a major investment option, highlighted by the Securities and Exchange Commission’s approval of several Bitcoin exchange-traded funds in January. This growing mainstream recognition reflects the company’s commitment to investing in Bitcoin.

“We believe the world needs an open protocol for money; a protocol that is not owned or controlled by any single entity…Our investment in Bitcoin transcends technology; “This is an investment in a future where economic empowerment is the norm.” Jack Dorsey said in the memo.

Despite the growing interest in Bitcoin, Dorsey noted that less than 3% of Block’s resources are currently devoted to Bitcoin-related projects. But the company updated its earnings expectations, forecasting annual adjusted core earnings to be at least $2.76 billion, up from the $2.63 billion previously projected.

The move to a Bitcoin-centric portfolio is not new for Block. The company first made headlines in October 2020 by purchasing 4,709 BTC at an average price of $10,618 per Bitcoin.

Subsequent investments in February 2021 involved adding 3,318 BTC each at a significantly higher price of $51,236.

As of March 31, 2024, Block reported holding 8,038 BTC worth $573 million and paper earnings of $233 million.

But despite those gains, Block’s shares have fallen 9% this year, amid additional pressure following reports that federal prosecutors are investigating the company’s internal compliance structures and how it handles transactions with sanctioned countries.