Square can add tens of millions of annual revenue by supporting bitcoin, according to one Wall Street firm.

The company revealed on Nov. 15 it is testing support for bitcoin through its Cash payments app.

"While we are positive on Square's strategy, to the extent it confers legitimacy on Bitcoin and prompts adoption by other providers (i.e., PayPal) the biggest beneficiary may be the crypto-asset industry," Credit Suisse analyst Paul Condra wrote in a note to clients Monday entitled "Going Crypto: Exploring the Bitcoin Play."

"We estimate that if Square can accumulate 10m bitcoin buyers over two years (tracking Coinbase's growth), this could drive an incremental $30m in revenue."

Condra said the company may charge a fee of 1.5 percent per transaction and the average customer could spend about $200 a year in bitcoin purchases, according to his estimates.

The analyst reiterated his neutral rating and increased his price target to $37 from $31 for Square shares, representing 16 percent downside to Friday's close.

The company's shares rose 3 percent Monday after the report.