Block, a payments company, plans to construct a Bitcoin mining system.
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, revealed in a blog post that it has successfully developed a three-nanometer mining chip in collaboration with a global semiconductor foundry. This project, which began in April 2023, is currently in the full design stage.
The decision to venture into Bitcoin mining comes after Block consulted with industry experts and identified several challenges within the sector. The company aims to support mining decentralization and disrupt a market that is currently dominated by a few key players. CoinShares estimates that Beijing-based Bitmain controls approximately 60% of the market.
James Butterfill, head of research at CoinShares, highlighted the limited competition in the sector, suggesting that there is an opportunity for new players to make a significant impact. In response to these market dynamics, Block completed the prototype of a five-nanometer Bitcoin mining chip in May 2023, using technology similar to that of Bitmain’s S21 mining machine.
The advancements in chip technology, coupled with the increasing demand for Bitcoin and recent developments like the halving event on April 20, which reduced new Bitcoin issuance by 50%, highlight the need for more efficient and cost-effective mining solutions. Butterfill believes that the next generation of three-nanometer chips could offer even greater efficiencies, further intensifying competition in the evolving industry.
Jack Dorsey, the founder of Block, has expressed his vision for Bitcoin mining to be as simple as plugging in a rig. He believes that the complexity of the process and the lack of sufficient incentives hinder widespread participation. Block aims to make the mining process more user-friendly as it enters the mining hardware industry.
Block’s project also addresses concerns about the concentration of mining hardware manufacturing in China, a country that has shown hostility towards the cryptocurrency sector. The company aims to decentralize the supply of mining hardware and the distribution of hashrate to reflect industry competition and mining difficulty. Block also plans to enhance the reliability and user experience of mining rigs, focusing on issues such as heat dissipation and noise.
Overall, Block’s expansion into the cryptocurrency mining sector aims to foster decentralization and disrupt a market dominated by a few players. The development of advanced mining chips and a comprehensive mining system reflects the growing demand for efficient and cost-effective solutions in the evolving Bitcoin industry.
