Block's Bitcoin (BTC) Gross Profit Halves to $52M on Cash App Fee Cuts

Fee Cuts Inside Cash App

Block's Bitcoin (BTC) trading business earned half as much in the third quarter as it did a year earlier, even as the payments company around it grew faster than planned. In results published on Tuesday (November 3), the Jack Dorsey-led firm reported gross profit of $52 million from bitcoin-related operations for July through September, down from $104 million in the prior-year quarter. Its shareholder letter attributes the drop to a strategic decision to lower fees on some bitcoin trades inside Cash App, the consumer payments app that anchors the segment.

Revenue for the business fell 11% year over year to $1.804 billion. The contraction is not a one-quarter event: bitcoin-related gross profit had already declined 26% in the first quarter and 31% in the second, and the third quarter's 50% drop is the widest yet. Block files the unit under a “Bitcoin Ecosystem” segment that combines customer bitcoin purchases inside Cash App, bitcoin withdrawal fees and Proto, its crypto mining hardware business. Because the segment's revenue includes the full amount customers pay for the Bitcoin (BTC) they buy, revenue runs far ahead of profit, and gross profit is the line that shows the unit's real economics.

The fee reductions account for most of the gap. A lower take rate on broadly similar trading volume pushes revenue down modestly and gross profit down sharply, which is exactly the shape of this quarter's numbers. Dorsey, a prominent voice of Bitcoin maximalism, has long treated cheap bitcoin access as a customer-acquisition lever rather than a profit center in its own right. The 2026 trajectory, from a 26% decline to a 50% one, reads as that trade-off being executed on schedule, with each fee cut converting trading margin into a wider funnel of prospective bitcoin buyers inside the app.

Remeasurement Gains Carry Net Income

The bitcoin segment's weakness did not spread to the rest of the company. Total gross profit rose 22% year over year to $3.235 billion in the quarter. Cash App delivered $2.07 billion in gross profit, up 27%, while Square, the merchant payments business, added $1.157 billion, up 14%. Adjusted operating income climbed 92% to $923 million, and both measures finished above the company's own prior guidance, which is why management was able to raise the full-year outlook in the same release.

Net income attributable to common shareholders came to $565.55 million, up roughly 20% from $461.54 million a year earlier. The improvement below the operating line did much of the work: operating income grew only 5% to $428.49 million, and pre-tax income of $612.49 million was essentially level with the $615.03 million posted a year ago, so the jump at the bottom line came chiefly from a tax burden that fell from $139.93 million to $48.35 million. Outside operations, corporate Bitcoin holdings generated $229.71 million in remeasurement gains, about 3.9 times the $59.59 million of a year earlier. That gain is an accounting figure, marking the holdings to the Bitcoin price at quarter end, and it involves no cash inflow. It also filled a gap, because the prior-year quarter carried $167.15 million of other income, mostly equity investment gains, that was almost entirely absent this time. Block valued its Bitcoin (BTC) investments at $771.88 million as of the end of September, a stake the company maintains as a long-term HODL position rather than a trading book.

Guidance Raised Outside the Bitcoin Desk

Block paired the print with bigger numbers for the year ahead. Full-year 2026 gross profit guidance moved up to $12.626 billion, a 22% year-over-year increase, and adjusted operating income guidance to $3.519 billion, with at least 15% gross profit growth projected for 2027. Management describes bitcoin and stablecoins as supports for Cash App's expansion, which crossed 60 million monthly transacting actives in September. Our reading is straightforward: the $52 million bitcoin figure is the price of a deliberate pricing decision inside one desk of a much larger company, not evidence of fading demand, and the unchanged $771.88 million stake keeps the balance-sheet exposure intact. What the raised guidance actually prices is the business outside bitcoin, which grew on every reported line.