Block Inc. shifts focus to Bitcoin mining amid plans to sunset Web5-focused TBD

Jack Dorsey founded payments company Block Inc. and is turning his focus to the cryptocurrency mining industry.

Formerly known as Square Inc. In a letter to shareholders on Nov. 7, Block said it would focus on expanding its presence in Bitcoin mining by reducing resources for music streaming service TIDAL and Sunset TBD, a startup focused on decentralizing the internet. sector.

Block acquired TIDAL in 2021 for approximately $300 million as the streaming service faced stiff competition and failed to gain traction. The platform continued to struggle, with reports showing workforce reductions and a $132.3 million impairment charge.

Meanwhile, TBD, a subsidiary of Block, has set out to create a decentralized web experience it calls Web5 in 2022. It’s unclear why the company plans to cease operations.

The timing of Block’s announcement coincides with Donald Trump’s victory in the US presidential election.

Recall that in June, Trump said he wanted to see all remaining Bitcoin mined in the US, highlighting its potential to help the country dominate the energy sector. The news was a major boost for Bitcoin mining stocks, bringing some energy back to an industry that has struggled with profits since this year’s halving halved mining rewards.

Block appears to be positioning itself to benefit from renewed momentum in the US mining sector, which it believes has a “healthy demand pipeline.”

Although Block does not directly mine Bitcoin, it develops mining equipment through its Proto initiative. Earlier this year, the company announced that it had developed a 3-nanometer mining chip, which Core Scientific, one of the leading Bitcoin miners, decided to include in its operations.

The letter stated that Block will also allocate a portion of the restructured resources to the self-custody hardware wallet that offers Bitkey. Launched in March 2024, the device allows users to store BTC while also facilitating purchases through traditional channels by leveraging its partnerships with exchanges and payment providers.

The company’s new direction comes as its revenue missed Wall Street forecasts, reporting $5.98 billion for the third quarter, falling short of the $6.24 billion expected and revenue falling following January layoffs at its Cash App, Foundational and Square divisions. About 40 Tidal employees in December.

Meanwhile, as Block narrowed its focus on the mining market, US Bitcoin miners also expanded their operations last month. In September, CleanSpak acquired seven Bitcoin mining facilities with the aim of achieving its goal of increasing the hash rate to 37 EH/s by the end of 2024.

In August, Marathon Digital Holdings raised $292.5 million to fund their strategic expansion.

According to HC Wainwright & Co.’s report in the third quarter of 2024, publicly traded Bitcoin mining firms collectively saw a 4.5% increase in hash rate.