Block's bitcoin profit halves as its coin holdings gain in value

Block, the company behind Cash App and Square, made half as much money selling bitcoin to its customers last quarter as it did a year earlier, even as the bitcoin it holds rose in value on paper. Bitcoin Ecosystem gross profit fell 50% to $52 million in the third quarter, the company said in its shareholder letter filed with an 8-K at 4:12 p.m. EST Tuesday, while a non-cash "remeasurement gain" on its own bitcoin, from the rise in bitcoin's price, added $229.7 million to pretax income [1][2].

The two numbers moved in opposite directions for different reasons, and only one comes from running the business.

The mechanism

Block makes money on bitcoin in two unrelated ways. The first is a business: Cash App customers buy and sell bitcoin, and Block keeps the difference between what it charges and what the coins cost it. Gross profit, the money left after those direct costs, is what Block reports for that line, which it calls Bitcoin Ecosystem [2].

That business has large revenue and a thin margin. Block reported $1.80 billion of bitcoin ecosystem revenue in the quarter and $1.75 billion of bitcoin ecosystem costs, leaving $52 million [2]. Block said the 50% drop was "driven primarily by a strategic decision to reduce the fee we charge on certain bitcoin transactions on Cash App" [2].

The second is an investment. Block holds bitcoin on its balance sheet, listed as "Bitcoin investment," worth $771.9 million at Sept. 30, against $777.5 million at Dec. 31 [2]. Under current accounting rules, companies mark those holdings to their market price each quarter, a step called remeasurement, and the change in value runs through the income statement. In the third quarter that produced a $229.7 million "remeasurement loss (gain) on bitcoin investment," shown as a gain [2].

The gain sits below operating income in Block's statements, alongside interest and other income. In the cash flow statement it appears among the adjustments to net income, the non-cash items added back or subtracted to reach cash from operations [2]. Block's own adjusted measures, including Adjusted Operating Income and Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), exclude "remeasurement gain or loss on bitcoin investment"; the letter says its adjustments "remove the effect of certain non-cash items" [2].

The evidence

Source: Block, Inc., Q3 2026 Shareholder Letter, Ex. 99.1 to Form 8-K, accession 0001628280-26-069513, accepted 4:12:52 p.m. EST Nov. 3, 2026 [1][2]. Statement figures in thousands, rounded.

Put against the whole company, bitcoin is a small slice of profit. Total gross profit grew 22% to $3.24 billion, the letter said, "with 27% year-over-year growth in Cash App and 14% year-over-year growth" in Square [2]. Bitcoin's $52 million was about 1.6% of that total, by Le Coin's calculation, down from about 3.9% a year earlier.

The holding gain was bigger than the bitcoin business. The $229.7 million remeasurement gain was more than four times the quarter's bitcoin gross profit, by Le Coin's calculation, and it is the main reason pretax income of $612.5 million came in above operating income of $428.5 million [2]. Over nine months the same line shows a $31.6 million loss, because the holding fell in value earlier in the year [2].

The rest of the business grew. Total net revenue rose to $6.72 billion from $6.11 billion a year earlier, and bitcoin's share of that revenue shrank to about 27% from about 33%, by Le Coin's calculation [2]. Net income attributable to common stockholders was $566 million, and diluted earnings per share were $0.92, the letter said [2]. Cash App "reached 60 million monthly transacting actives in September," it said [2]. None of those figures depends on the bitcoin holding's value, except net income and earnings per share, which include the remeasurement gain [2].

Block raised its outlook. "For 2026, we now expect $12.626 billion in gross profit, up 22% year over year, and Adjusted Operating Income of $3.519 billion, or 28% margin," the letter said [2]. It also said, "We're using bitcoin and stablecoins as an enabler of Cash App's expansion" [2].

The objection

A cheaper fee is a choice, not a collapse. Block said it cut the fee on purpose, and a smaller bitcoin margin can still bring customers into Cash App, where gross profit grew 27% [2]. The letter does not say how many more bitcoin transactions the cut produced. And the paper gain is a point-in-time valuation: the same accounting that added $229.7 million this quarter subtracted from earnings earlier in the year [2]. Block's forward-looking statements say its guidance reflects "assumptions the Company believes are reasonable as of the date of this filing, and actual results may vary" [2].

The tell (Le Coin's view)

Block is treating bitcoin trading less as a profit line and more as a feature that keeps customers in its app. The fee cut halved what it earns from those trades, while its bitcoin holding, roughly flat in dollar value since December, swung earnings more than the trading business did. For readers comparing quarters, the number to watch in Block's results is the one it excludes from its own adjusted figures.

Sources

• [1] Block, Inc., Form 8-K (Item 2.02), accession 0001628280-26-069513, accepted 4:12:52 p.m. EST Nov. 3, 2026, https://www.sec.gov/Archives/edgar/data/1512673/000162828026069513/0001628280-26-069513-index.htm ; accessed 4:27 p.m. EST Nov. 3.
• [2] Block, Inc., Exhibit 99.1, Q3 2026 Shareholder Letter, https://www.sec.gov/Archives/edgar/data/1512673/000162828026069513/q32026shareholderletter.htm ; accessed 4:27 p.m. EST Nov. 3.

Holding the Corner.

Not financial advice.