Block, the payments company founded by former Twitter CEO Jack Dorsey, has announced its expansion into the cryptocurrency mining sector. The company, previously known as Square, has developed its own Bitcoin mining system, including a three-nanometer mining chip. The project, which began in April 2023, is currently in the design stage in collaboration with a leading semiconductor foundry.
The decision to enter the mining industry comes after Block consulted with Bitcoin miners and identified several challenges within the market. The company aims to support mining decentralization and disrupt the dominance of a few key players, such as Bitmain, which controls around 60% of the market.
James Butterfill, head of research at CoinShares, highlighted the limited competition in the sector and the potential for new entrants to make an impact. In response to market dynamics, Block developed a prototype of a five-nanometer Bitcoin mining chip in May 2023, using technology similar to Bitmain’s S21 mining machine.
The advancements in chip technology, coupled with increasing Bitcoin demand and the recent halving event, which reduced new Bitcoin issuance by 50%, highlight the need for more efficient and cost-effective mining solutions. Butterfill suggested that the next generation of three-nanometer chips could offer even greater efficiencies, further enhancing competition in the industry.
Jack Dorsey has emphasized the challenges of Bitcoin mining and expressed a vision for a more user-friendly process. Block aims to make mining as simple as plugging in a rig. The company’s project also addresses concerns about hardware vulnerabilities and the concentration of ASIC chip manufacturing in China. Block’s goal is to decentralize the supply of mining hardware and the distribution of hashrate.
The company also aims to overcome barriers such as the scarcity and high cost of mining rigs and unpredictable delivery schedules. Block is exploring a Bitcoin mining system based on custom silicon and advocates for more emphasis on vertical integration and silicon design.
Thomas Templeton, Block’s general manager for hardware, plans to enhance the reliability and user experience of mining rigs, addressing issues such as heat dissipation and noise.
