A Unique Bitcoin Company just got into the S&P 500

Summary

In this video, Forest Hodel discusses Block (formerly Square) joining the S&P 500, highlighting its unique approach to Bitcoin accumulation. The company holds over 8,500 Bitcoin and integrates cryptocurrency into its business with innovative products like Bit Key and Bitcoin mining ASIC chips. Block’s CEO, Jack Dorsey, has long supported Bitcoin adoption, though the company’s rollout of Bitcoin payment systems has been slow. With Block now in the S&P 500, its inclusion could lead to increased passive capital flows into Bitcoin, signaling broader acceptance of Bitcoin-related companies in traditional markets. Hodel also discusses how Block's strategy impacts both the company and Bitcoin's future.

Takeaways

• 😀 Block, formerly known as Square, has entered the S&P 500 index, potentially unlocking billions of passive capital into Bitcoin.
• 😀 Block is the third company in the S&P 500 to hold Bitcoin, joining Tesla and Coinbase.
• 😀 Jack Dorsey, CEO of Block and former Twitter co-founder, is a long-time advocate for Bitcoin integration into Square’s point-of-sale system.
• 😀 Block owns Cash App, which already supports Bitcoin and Lightning payments, showing its commitment to Bitcoin adoption.
• 😀 Block’s Bitcoin holdings currently total 8,584 BTC, making it the 13th largest public company holder of Bitcoin.
• 😀 Block’s Bitcoin acquisition strategy includes using 10% of Bitcoin-related profits from Cash App and other services to dollar-cost average more Bitcoin.
• 😀 The company has been innovating with its own Bitcoin hardware products, including an ASIC mining chip called Proto, developed in North America.
• 😀 In 2024, Block launched Bit Key, a self-custody Bitcoin wallet, aiming to simplify user security, although some Bitcoiners remain critical of it.
• 😀 Block’s modest Bitcoin acquisition strategy has made it a hybrid fintech and Bitcoin company, appealing to investors interested in a balanced, non-debt-driven approach.
• 😀 Block’s inclusion in the S&P 500 marks a significant milestone for Bitcoin adoption within traditional finance, potentially paving the way for other Bitcoin-focused companies like MSTR to enter the index.
• 😀 The addition of Block to the S&P 500 could lead to an influx of passive capital, further solidifying its position and growth potential in the Bitcoin ecosystem.

Q & A

What new development has Block (formerly Square) achieved in relation to Bitcoin?

Block has entered the S&P 500 index, making it one of the first Bitcoin-related companies to be included. This development could potentially unlock billions in passive capital for Bitcoin.

What are some key innovations Block has made in the Bitcoin space?

Block has launched BitKey, a self-custody Bitcoin wallet, and developed the Proto ASIC chip for Bitcoin mining. Additionally, they are working on integrating Bitcoin payments into their Square point-of-sale system.

How does Block acquire and accumulate Bitcoin?

Block acquires Bitcoin through profits generated from their Bitcoin-related businesses, like Cash App and their Bitcoin mining activities. They allocate 10% of these Bitcoin-related profits to acquire more Bitcoin using a dollar-cost averaging strategy.

What makes Block’s approach to Bitcoin accumulation unique?

Unlike other companies that aggressively acquire Bitcoin, Block’s strategy is conservative, focusing on using profits from their Bitcoin ventures to slowly acquire more Bitcoin over time, without leveraging their balance sheet.

Why is Jack Dorsey’s involvement in Bitcoin significant for Block?

Jack Dorsey, the CEO of Block, is a prominent advocate for Bitcoin. His long-term vision of integrating Bitcoin payments into Square’s point-of-sale units and his backing of Bitcoin-related initiatives (like the Noster project) make him a strong leader for Block's Bitcoin endeavors.

What impact could Block’s inclusion in the S&P 500 have?

Being added to the S&P 500 index will bring Block more passive investment flows from S&P 500-related ETFs, potentially unlocking billions in capital. This will strengthen Block’s financial position and further support their Bitcoin-related activities.

How does Block’s Bitcoin strategy compare to other Bitcoin companies in the S&P 500?

Block is a fintech company with a Bitcoin division, unlike Coinbase, which is considered more of a crypto exchange. Block’s approach is measured and focused on steady Bitcoin accumulation and innovation, rather than rapid expansion or speculative trading.

What criticisms has Jack Dorsey faced in the Bitcoin community?

Jack Dorsey has faced criticism for delays in integrating Bitcoin payments into Square’s point-of-sale systems, despite having the ability to onboard millions of merchants. Some Bitcoiners question why progress has been slow, even though he has been a Bitcoin advocate for years.

How does Block’s Bitcoin holding compare to other public companies?

As of now, Block holds 8,584 Bitcoin, ranking them as the 13th largest public company holder of Bitcoin. They are closely followed by Coinbase (12th) and Tesla (10th).

What is the significance of Block’s Bitcoin-related businesses, such as BitKey and Proto?

These businesses are important for Block's long-term strategy to integrate Bitcoin into both consumer and business systems. BitKey offers self-custody for Bitcoin, while Proto’s ASIC chips could help establish North America as a key player in Bitcoin mining.