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XYZ · Forward model · Bitcoin Ecosystem · Bull 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 $137.95 all other verticals held in this portfolio case
Final-quarter revenue $1.98B 15% of company revenue
Explicit segment contribution $1.11B EBITDA less segment capex, before corporate items

The volume side re-accelerates while the cost base stays where the February reorganisation left it. Square's US recovery is real, Afterpay attach keeps lifting the Cash App monetization rate, Borrow scales into a bigger eligible base, and bitcoin stops shrinking as a share of revenue so reported growth and real growth converge. The multiple re-rates to 2.2x revenue. What this case does not claim is that anything changes about the credit book.

Bitcoin Ecosystem

Basis quarter$1.89B
Final quarter$1.98B
Implied CAGR+1%
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: $1.98B (2031Q2E)

Period Value
2025Q1 $2.33B
2025Q2 $2.17B
2025Q3 $2.02B
2025Q4 $1.98B
2026Q1 $1.80B
2026Q2 $1.89B
2026Q3E $1.87B
2026Q4E $1.86B
2027Q1E $1.85B
2027Q2E $1.84B
2027Q3E $1.84B
2027Q4E $1.84B
2028Q1E $1.84B
2028Q2E $1.84B
2028Q3E $1.85B
2028Q4E $1.85B
2029Q1E $1.86B
2029Q2E $1.87B
2029Q3E $1.88B
2029Q4E $1.89B
2030Q1E $1.91B
2030Q2E $1.92B
2030Q3E $1.93B
2030Q4E $1.95B
2031Q1E $1.96B
2031Q2E $1.98B

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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