🌎 Block Inc. Shifts Focus to Bitcoin Mining Amid Strategic Changes

Jack Dorsey founded payments firm Block Inc. is shifting its focus towards the cryptocurrency mining sector.

Block Inc.’s Strategic Shift

In a recent shareholder letter dated Nov. 7, Block, previously known as Square Inc., announced its decision to reallocate resources from its music streaming service TIDAL and the TBD venture, which aimed at decentralizing the internet, to concentrate on expanding its presence in the Bitcoin mining sector.

Background on TIDAL and TBD

Block acquired TIDAL in 2021 for approximately $300 million. Despite the acquisition, TIDAL continued to face significant competition and struggled to gain traction, resulting in workforce reductions and a $132.3 million impairment charge.

Meanwhile, TBD, a subsidiary of Block, launched an initiative to create a decentralized web experience named Web5 in 2022. The reasons behind the decision to discontinue TBD operations remain unclear.

Market Timing

The announcement from Block coincides with Donald Trump’s recent win in the U.S. presidential election. Trump had previously expressed interest in seeing all remaining Bitcoin mined in the U.S., emphasizing its potential to bolster the country’s dominance in the energy sector. This news provided a significant boost for Bitcoin mining stocks and reinvigorated a sector that had been struggling with reduced profits following this year’s halving event.

Block Inc.’s Mining Initiatives

Block appears to be positioning itself to take advantage of the renewed interest in the U.S. mining sector, which it describes as having “a healthy pipeline of demand.” Although Block does not mine Bitcoin directly, it develops mining equipment through its Proto initiative. Earlier this year, the company announced the development of a 3-nanometer mining chip, which has been incorporated into the operations of prominent Bitcoin miner Core Scientific.

Focus on Bitkey

Additionally, Block will allocate some of its restructured resources towards its self-custodial hardware wallet, Bitkey. Launched in March 2024, Bitkey allows users to store BTC and facilitates purchases through traditional channels, leveraging partnerships with exchanges and payment providers.

Financial Performance and Workforce Adjustments

This strategic shift follows Block’s revenue miss in the third quarter, reporting $5.98 billion, short of Wall Street’s expected $6.24 billion. The company also experienced layoffs across its Cash App, Foundational, and Square divisions in January, along with a reduction of around 40 employees in the TIDAL division in December.

Expanding Operations in the U.S.

As Block narrows its focus on the mining market, U.S. Bitcoin miners have been expanding their operations. In September, CleanSpark acquired seven Bitcoin mining facilities to reach its target of boosting its hashrate to 37 EH/s by the end of 2024. In August, Marathon Digital Holdings raised $292.5 million to fund its strategic expansions.

According to a report from H.C. Wainwright & Co. in the third quarter of 2024, publicly listed Bitcoin mining firms collectively saw a 4.5% increase in hashrate.