Exclusive - Overstock CEO says bitcoin sales to add 4 cents to 2014 EPS

NEW YORK Wed Aug 13, 2014 11:13pm BST

Bitcoin (virtual currency) coins are seen in an illustration picture taken at La Maison du Bitcoin in Paris July 11, 2014.   REUTERS/Benoit Tessier

Bitcoin (virtual currency) coins are seen in an illustration picture taken at La Maison du Bitcoin in Paris July 11, 2014.

Credit: Reuters/Benoit Tessier

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NEW YORK (Reuters) - Overstock.com Inc's sales through bitcoin are expected to add 4 cents per share to its earnings this year, the online retailer's chief executive, Patrick Byrne, told Reuters.

Bitcoin sales at Overstock (OSTK.O), which started accepting this type of currency as payment for items on its website in January this year, have exceeded $2 million (£1.20 million) so far, or about one-quarter of 1 percent of total sales.

Byrne expects bitcoin sales of $6 million to $8 million in 2014, most of it from new customers.

"I think the world expects us to make 75-80 cents per share this year. And 4 cents of that would be attributable to bitcoin," Byrne said to Reuters last Friday.

So far, total bitcoin sales have totalled $15,000 per day, or $300,0000 per month. By the end of the year, Byrne expects Overstock to do $1 million in bitcoin sales per month.

Overstock, which uses Coinbase as a payment processor, has been at the forefront of the bitcoin revolution. It was the first company with at least $1 billion in sales to accept bitcoin payments. The company expects $1.5 billion in sales this year.

Soon after Overstock accepted bitcoins, other large U.S. companies followed suit. Computer maker Dell Inc, Dish Network Corp (DISH.O) and Newegg Inc (EGGZ.N), an online retailer of computer hardware and software, announced they would accept bitcoin payments as well.

More than 60,000 merchants worldwide accept bitcoin, according to data from CoinDesk, a provider of bitcoin data.

"When technology comes along like crypto-currency, which can replace at a far lower cost ... I am all for supporting it," Byrne said.

Bitcoin payment processors such as Coinbase charge Overstock less than 1 percent, sometimes near zero, to process a transaction. A credit card payment, on the other hand typically has a 3 percent transaction fee, analysts said.

Gil Luria, managing director and financial technology analyst at Wedbush Securities, said a 2 percent to 3 percent savings in transaction costs is a meaningful number especially for retailers like Overstock, which has "razor-thin margins."

Overstock also plans to accept bitcoin payments from international customers by mid-September this year. In addition, it will allocate 4 percent of bitcoin sales to promote the currency, effective mid-September as well.

"We're in bitcoin for the long haul, I intend to make it permanent," said Byrne. "Cryptocurrencies like bitcoin are going to be around for as long as the law of mathematics works."

On Wednesday, Overstock was down 1.2 percent at $17.23, while bitcoin fell 4 percent to $544.88.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Chris Reese and Steve Orlofsky)