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XYZ · Forward model · Bitcoin Ecosystem · Bear case

What has to happen in Bitcoin Ecosystem

Model as of

This page changes Bitcoin Ecosystem inside the complete XYZ model. Every other vertical, corporate programme and valuation assumption stays in the selected portfolio case.

XYZ forward model
Horizon
Consolidated fair value $47.13 all other verticals held in this portfolio case
Final-quarter revenue $1.08B 15% of company revenue
Explicit segment contribution $180M EBITDA less segment capex, before corporate items

The efficiency story was one-time and the credit book is the bill. Loss expense keeps compounding, legal contingencies keep landing in G&A, Square GPV fades with the US consumer, and the market keeps refusing to pay for raised guidance. What this case does not assume is a bitcoin collapse or the loss of the Square Financial Services charter - the damage is done by the loss line and the multiple, not by the franchise. It lands at $47.13, just under the 52-week low of $48.21.

Bitcoin Ecosystem

Basis quarter$1.89B
Final quarter$1.08B
Implied CAGR−11%
Final revenue mix15%

Bitcoin bought by Cash App customers, booked gross. $1,894M of revenue produced $72M of gross profit in Q2 2026 - a 3.8% margin on 29% of the company's revenue. It exists in this model to keep the revenue reconciliation honest and to explain why Block's reported growth rate understates the business it actually runs.

Last four quarters
2025 Q3 $2.02B Reported
2025 Q4 $1.98B Reported
2026 Q1 $1.80B Estimated
2026 Q2 $1.89B Reported
Customer purchases of bitcoin within Cash AppBitcoin withdrawal feesProto mining hardware and Bitkey
Sequential growth −2.0%/qtr decaying toward 0.0% Revenue fell 12.8% year over year on lower trading volume and a deliberately cut fee. -2% a quarter continues that, slower.
Bitcoin Ecosystem

Latest: $1.08B (2031Q2E)

Period Value
2025Q1 $2.33B
2025Q2 $2.17B
2025Q3 $2.02B
2025Q4 $1.98B
2026Q1 $1.80B
2026Q2 $1.89B
2026Q3E $1.82B
2026Q4E $1.75B
2027Q1E $1.69B
2027Q2E $1.63B
2027Q3E $1.58B
2027Q4E $1.53B
2028Q1E $1.49B
2028Q2E $1.45B
2028Q3E $1.41B
2028Q4E $1.37B
2029Q1E $1.34B
2029Q2E $1.30B
2029Q3E $1.27B
2029Q4E $1.24B
2030Q1E $1.21B
2030Q2E $1.18B
2030Q3E $1.16B
2030Q4E $1.13B
2031Q1E $1.11B
2031Q2E $1.08B

Assumptions & reasoning

  • SEASONALITY: none applied. Ratio-to-centred-four-quarter-moving-average gives 0.982 for 2025 Q3 and 1.011 for 2025 Q4, both within 2% of one and each from a single window, with no observation at all for Q1 or Q2. Bitcoin revenue is the bitcoin price times Cash App trading volume; neither has a calendar. Left ASEASONAL. Derived from the actuals in this vertical.
  • The 10-K states the accounting plainly: 'The sale amounts received from our customers are recorded as revenue on a gross basis and the associated bitcoin cost as cost of revenues, as we are the principal in the bitcoin sale transaction.'
  • The 10-K also sizes the distortion: 'the bitcoin ecosystem contributed 35% and 43% of the total revenue in 2025 and 2024, respectively, gross profit generated from the bitcoin ecosystem was only 4% and 5% of the total gross profit'. By Q2 2026 it was 28.6% of revenue and 2.3% of gross profit.
  • This one line is why the R40 house Rule of 40 reads about 20 for a company whose gross profit grew 25% and whose Adjusted Operating Income grew 57%. Every percentage point this line shrinks lifts blended gross margin without anything real happening.
  • Block's own $533.9M bitcoin investment - 9,117 bitcoins at 30 June 2026 - is a balance-sheet item, not this line. Its remeasurement runs below operating income, an $88.5M loss in Q2 2026, and is excluded from Adjusted Operating Income.
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