Jack Dorsey founded payments firm Block Inc. is pivoting its focus towards the cryptocurrency mining sector.
In a Nov. 7 shareholder letter, Block, formerly Square Inc., said it would dial down resources towards its music streaming service TIDAL, and sunset TBD, a venture focusing on decentralizing the internet, to focus on expanding its presence in the Bitcoin mining sector.
Block acquired TIDAL in a 2021 acquisition for roughly $300 million, as the streaming service was facing stiff competition and failing to gain traction. The platform has continued to struggle, with reports indicating workforce reductions and a $132.3 million impairment charge.
Meanwhile, TBD, a subsidiary of Block, set out to create a decentralized web experience in 2022 which it dubbed Web5. It is not clear why the company intends to shut down operations.
The timing of Block’s announcement coincides with Donald Trump winning the U.S. presidential election.
Recall that in June, Trump said he’d like to see all remaining Bitcoin mined in the U.S., highlighting its potential to help the country dominate the energy sector. The news was a big boost for Bitcoin mining stocks and brought some energy back to a sector that’s been struggling with profits since this year’s halving slashed mining rewards by half.
Block seems to be positioning itself to capitalize on the renewed momentum in the U.S. mining sector, which it believes has “a healthy pipeline of demand.”
While Block doesn’t mine Bitcoin directly, it develops mining equipment through its Proto initiative. Earlier this year, the company revealed it had developed a 3-nanometer mining chip, which prominent Bitcoin miner Core Scientific has decided to incorporate into its operations.
Block will also allocate a portion of the restructured resources towards its self-custodial hardware wallet offering Bitkey, the letter noted. Launched in March 2024, the device lets users store BTC while also facilitating purchases via traditional channels leveraging its partnerships with exchanges and payment providers.
The company’s new direction comes as its revenue missed Wall Street estimates, reporting $5.98 billion for the third quarter, falling short of the expected $6.24 billion, and follows layoffs across the Cash App, Foundational, and Square divisions in January, along with a reduction of around 40 Tidal employees in December.
Meanwhile, as Block narrows its focus on the mining market, U.S. Bitcoin miners have been expanding operations over the past month. In September, CleanSpak acquired seven Bitcoin mining facilities in a bid to reach its goal 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 an H.C. Wainwright & Co. report in the third quarter of 2024, publicly listed Bitcoin mining firms collectively saw a 4.5% increase in hash rate.