Payments Company Block To Build A Bitcoin Mining System

On Tuesday (April 23), Block, the payments firm founded by ex-Twitter CEO Jack Dorsey, announced it is expanding its presence in the cryptocurrency mining sector by developing its own Bitcoin (BTC) mining system.

The company, previously known as Square, detailed in a blog post that it has successfully developed a three-nanometer mining chip. This project, initiated in April 2023, is currently in the full design stage in collaboration with a top global semiconductor foundry.

Block Intends To Foster Bitcoin Mining Decentralization Across The Market

Block has announced its plan to develop a comprehensive Bitcoin mining system, which will include both system design and a standalone mining chip, after extensive consultations with Bitcoin miners revealed multiple challenges within the industry. These discussions have informed Block’s strategy to support mining decentralization and potentially disrupt a market that is currently dominated by a few key players. Notably, Beijing-based Bitmain controls approximately 60% of the market, according to CoinShares estimates.

James Butterfill, head of research at CoinShares, pointed out the limited competition in the sector, highlighting a substantial opportunity for new entrants to make an impact. In response to these market dynamics, Block completed the prototype of a five-nanometer Bitcoin mining chip in May 2023, employing technology comparable to that used in Bitmain’s S21 mining machine.

The advancements in chip technology, coupled with increasing Bitcoin demand and recent developments like the halving event on April 20—which reduced new Bitcoin issuance by 50%—underscore the growing need for more efficient, cost-effective, and reliable mining solutions. Butterfill suggested that the next generation of three-nanometer chips could offer even greater efficiencies, further enhancing the competitive landscape in this rapidly evolving industry.

According to Dorsey: “Bitcoin mining should be as easy as plugging a rig into a power source”

In 2021, Jack Dorsey highlighted the challenges of Bitcoin mining, pointing out that it isn’t accessible to everyone due to its complexity and the lack of sufficient incentive for individuals to operate their own miners. Dorsey expressed a vision for Bitcoin mining that involves simplicity akin to just plugging in a rig. This statement came as his company, Block, ventured into the mining hardware industry, aiming to make the process more user-friendly.

we’re building a mining rig https://t.co/IKOQHNSHgO

— jack (@jack) April 23, 2024

Amid concerns from the Bitcoin community about hardware vulnerabilities potentially affecting network stability, it is notable that the ASIC chips used in these rigs are predominantly manufactured in China—a country that has shown increasing hostility towards the cryptocurrency sector. In response, Block announced on a recent Tuesday that its project’s goal is to decentralize the supply of Bitcoin mining hardware as well as the distribution of hashrate, which reflects industry competition and mining difficulty.

The fintech firm also addresses a significant barrier: the scarcity and high cost of mining rigs, coupled with unpredictable delivery schedules. While specific details were sparse in their latest update, Dorsey had previously mentioned in 2021 that Block was exploring a Bitcoin mining system based on custom silicon. He advocated for more emphasis on vertical integration and silicon design, which he believes is overly concentrated among a few companies.

Moreover, Thomas Templeton, Block’s general manager for hardware, has shared plans to enhance the reliability and user experience of mining rigs, specifically tackling prevalent issues like heat dissipation and noise.