Block is significantly increasing its Bitcoin mining business operations, in the context of Donald Trump's victory creating a more favorable environment for the cryptocurrency industry.
The blockchain infrastructure and payments company founded by Jack Dorsey announced in a shareholder letter on Thursday that they will reallocate resources to focus on developing Bitcoin mining devices.
Trump's campaign promise to support Bitcoin mining in the US comes at a critical time for the industry, especially as it faces profitability challenges following the recent halving event, which reduced the Bitcoin mining reward to 3.125 BTC.
This move also comes as Block is preparing to scale back its investment in TIDAL, the music streaming platform the company acquired in 2021 for around $300 million. Notably, the company will also discontinue its "Web5" decentralized internet initiative, TBD.
Block said this restructuring will help the company redirect resources to Proto, its Bitcoin mining initiative that the company believes is "strongly aligned with market demand and trends". However, it remains unclear whether Block's Proto team will focus on developing Bitcoin mining chips or also participate in building the company's modular mining platforms and software.
Block's strategic shift comes after the company announced plans to lay off 10% of its workforce in January, as the company's rapid growth had outpaced its ability to scale the business and revenue.
However, Block's Q3 2024 financial results showed significant improvement. The company's gross profit increased 19% to $2.25 billion year-over-year, primarily driven by contributions from Cash App ($1.31 billion) and Square ($932 million). Operating income was $323 million, with net income of $284 million. The company's core earnings also grew strongly, reaching $807 million, up 69% year-over-year.
Block has been developing proprietary hardware products, particularly 3 nanometer mining chips, to compete directly with Bitmain's devices, the industry leader in Bitcoin mining and the owner of Antpool, one of the largest mining pools, accounting for around 21.3% of the Bitcoin network's hashrate.
A notable deal in the Bitcoin mining industry is Core Scientific, one of the largest Bitcoin mining companies in the US, committing to use Block's mining equipment for its operations. This is considered one of the most significant deals in the history of the Bitcoin mining industry.
Block's strategic moves reflect a strong focus on developing Bitcoin mining hardware amid an increasingly vibrant cryptocurrency market. Along with supportive policies from the new administration, the company expects to expand its presence in the Bitcoin mining industry while overcoming the profitability challenges following the recent halving event.
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According to Decrypt
