Jack Dorsey’s Block commits to Bitcoin mining and self-custody wallet, Bitkey

According to a shareholders’ letter from the Jack Dorsey-led payment company Block, sent on November 7, the company will commit more resources to Bitcoin mining and Block’s self-custody wallet, Bitkey. It also said the company will abandon its Web5 internet project, TBD, and reduce investment in its music streaming project, Tidal, to get more funding for the Bitcoin mining project.

The decision comes after Trump’s win in the November 5 presidential elections, with the president-elect promising a crypto-friendlier environment in the country. The campaign promises were repeated at multiple meetings with Bitcoin mining companies. The President-elect assured the crypto community of revamping mining activity and creating more energy sources to support BTC mining. 

The shareholders’ letter notably highlighted Block’s performance in the third quarter. The Wall Street company revealed that its revenue came in below expectations, hitting $5.98 billion instead of the predicted $6.24 billion. The amount does not include Bitcoin revenue, which was over $3 billion, up 11% year-on-year.

Block still managed to exceed the profit forecast despite the dwindling performance of its stocks. 

Block will redirect its focus to Block Proto

Block has been investing more in Bitcoin, introducing the production of ASIC mining chips through the Block Proto team. In July, the company collaborated with top mining infrastructure operation company Core Scientific, providing 3 new nanometer mining ASICs. Core Scientific is dedicated to decentralized Bitcoin mining, with Block Proto joining in the vision.

Proto’s ASIC chips aim to improve efficiency, reliability, and uptime in large-scale mining firms. Block Proto’s team lead Thomas Templeton mentioned the significance of their partnership with Core Scientific in ensuring mining decentralization. 

“This agreement is a good example of how we envision our mining products pushing forward the advancement and decentralization of the mining industry.”

–Thomas Templeton, Block Proto Team Lead

Block also changed its BTC purchase strategy in May, redirecting 10% of its Bitcoin revenue profits to buying more BTC every month. The company mentioned BTC as the perfect candidate as “an open protocol for money outside the control of any single entity.”

Bitcoin mining profitability declines since halving

JPMORGAN WARNS OF FALLING BITCOIN MINING PROFITS AS HASHRATE RISES

JPMorgan’s latest report highlights that Bitcoin mining profitability has hit record lows as the network's hashrate increases, now back at pre-halving levels.

U.S.-listed miners saw their share of the global… pic.twitter.com/VCoNFfQMCS

— Crypto Town Hall (@Crypto_TownHall) September 16, 2024

Bitcoin mining profitability has been down since the Bitcoin halving event in April, with a JP Morgan report in September highlighting the third consecutive drop in a row. According to the Wall Street bank, several factors contributed to the continued decline, including the increasing mining difficulty and Bitcoin hashrate. 

JP Morgan revealed that in August, BTC mining profitability was at $43,600, significantly lower than the 2021 highs of $342,000 per exahash per second. The August record of $43,600 was the lowest the industry had ever recorded.

However, profitability fell even further in September, reaching another record low of $42,100, 6% lower than August’s rewards. September was the third month in a row that BTC profitability had plunged. 

JP Morgan continued that the profitability plunged further despite the top cryptocurrency increasing in price and market volatility subsiding. When the bank released the report, BTC was up 44% on the year.

Still, U.S. BTC mining companies have been increasing their share of the global BTC mining hashrate. In June, the companies reached just above 26% of the global BTC hashrate. The value was still significantly lower than China’s, which was over 50%.