Reading Square's 2019 investor letter, found this side note where they explained ”Why deducting bitcoin revenue better reflects the economic benefits" a bit confusing
anybody familiar with this cares to elaborate 

pic.twitter.com/cOIUpxG4Qi
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Reading Square's 2019 investor letter, found this side note where they explained ”Why deducting bitcoin revenue better reflects the economic benefits" a bit confusing
anybody familiar with this cares to elaborate 

pic.twitter.com/cOIUpxG4Qi
Basically just saying they don’t book what’s in effect GTV not revenue
Yep. From Square’s perspective Cash App customers can access BTC like a bank customer can access physical currency from an ATM. If bank somehow recorded $100 withdrawn as $100 in revenue (“We sold you paper for $100 of your deposits. COGS for paper: $100.”) that would be silly.
The specific effect of the silliness is that it greatly inflates revenues and makes them unpredictably linked to the motion of the Bitcoin market, which is not volatility Square wants in their business, so they tell investors “GAAP-wise we have to report this but ignore it.”
@patio11 related question, but why is Cash app able to generate 120 million of profits in q3 while Venmo is still struggling to reach profitability despite having 400 million revenue/yr? They mainly monetize through the same methods right?pic.twitter.com/EzP2yDASzZ
I do not have a strong point of view on this question, which would likely benefit from more of an insider perspective at one of those firms. I suspect that there are some severe challenges in allocating expenses (e.g. engineering) internally, which is not exactly a new problem.
e.g. If you were trying to analyze the P&L for Gmail, for example, you'd care a lot about "What should Google charge Gmail for access to its engineering infrastructure and distribution?" and "What should Gmail charge Google ads for increasing the propensity-to-consume of users?"
Those are probably reasonably hard problems internal to a company and bordering on unsolvable externally. You can make a model, sure. It will be a lie, but perhaps it is a useful lie.
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