Jack Dorsey’s Square Doubles Down on Bitcoin Mining, Abandons ‘Web5’ – Here’s Why

The payment company owned by Jack Dorsey, Block, previously referred to as Square, has reportedly made a strategic direction that includes advancing investments in BTC mining, ending support for a decentralized internet endeavour known as ‘Web5’. This decision was made shortly after Donald Trump’s election, though his win signalled that the US can become more favourable to the crypto-world, which may be beneficial for Bitcoin miners that are still struggling with profitability nowadays. This article also analyses Square’s action, Trump’s effect on the crypto market, and where this leaves the Bitcoin mining industry.

The new strategic direction of Square’s Bitcoin Mining

The company said it will cut down investments in its music streaming service, Tidal, and stop working on its newly envisioned technology, Web5. Block also shared the decision in its Q3 shareholder update letter, where the company highlighted a new focus on Bitcoin mining hardware and its self-custody wallet service, Bitkey.

There, “we’re reducing our investment in TIDAL and generally, slowing down TBD, a unit which was working on Web5,” the company stated, according to the crypto news network.“This will allow us to fund our Bitcoin mining effort, as well as our self-custody wallet, called Bitkey, which has more demand coming through.” This speaks with current market conditions since the company recently decided to shift from other mines and focus on availing Bitcoin, as recent halving has cut mining rewards by 50 %.

The company’s primary ventures in mining are to design and manufacture its own mining equipment for sale to Bitcoin mining companies. In July, the America’s largest Bitcoin miner Core Scientific declared interest in employing Block’s mining apparatus for its operation, a major achievement in the company’s mining plan.

 Trump’s Election Victory Spurs Optimism for Crypto

Donald Trump move back to White House has come with a hope of policy relaxation in the issuing of digital currencies, something that may be a breath of fresh air to Bitcoin miners. During the campaign, Trump focused on the positive aspects of the crypto business as a tool for increasing GDP in the United States. It has evoked many investors’ hope anticipating the change on stand towards these products.

The speculation is that Trump’s election was good for the crypto market as evidenced by the movement of Bitcoin after the election. Digital currency trading rose to $250 bln trading within the first quarter this year with the markets valued at $2.5 trillion, as per media sources, on expectation that the new government would support positive crypto regulations. Crypto sources pointed out that Trump’s word has revived bullish sentiment among Bitcoin miners and investors, especially when new miners like Block are increasing their Bitcoin mining investments under the policy.

Scaling Back: Peers Web5 and Tidal Take a Back Seat

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Block first discussed ‘Web5’ in 2022 as a decentralized and user-focused alternative to the Web3 that is currently used for collecting and managing users’ personal data without their consent. Unlike the widely recognized Web3 as the next-generation internet based on blockchain and DeFi, Web5 was designed to incorporate decentralized identity and data management solutions with an equally grand vision for the actual internet. However, with the shutdown of Web5, such goals are no longer quite clear.

Its Tidal buyout back in 2021, for approximately $300 million was also downsized in this restructuring. Tidal was supposed to allow Block to discover how music, crypto, and creator compensation work together. Nonetheless, per the recent communication from Block’s shareholders, the various initiatives it had developed had grown “beyond the business and the revenues” of the firm, compelling the firm to readjust its focus.

In December, Block said it planned to cut its workforce by as much as 10% by the close of business next year to cut costs.

Third-Quarter Results and Market Response

Apart from the change of its strategic direction, Block revealed that it recorded $5.98 in the third quarter; this was not well received by Wall Street as it forecasted to be at $6.24b, estimates from *FactSet*. It is important to note that Block ‘s stock price declined by as much as 10% of its value after releasing its underwhelming revenue report.

Even though Block itself does not mine bitcoin, the company’s value proposition to the space is that it offers essential mining tools and infrastructure. This year in January, Block successfully created a new 3nm mining chip, which is a significant advancement in Bitcoin mining chips. This chip, which took almost a year to develop and was finished in April, is expected to improve the effectiveness and productivity of Block’s mining rigs, making them interesting to customers such as Core Scientific.

Conclusion on Block’s Interest in Bitcoin Mining

Therefore, the decision of Square to step up efforts in Bitcoin mining as well as scale down on Web5 shows the strategic development of the company’s priorities towards more market demands and profitability-oriented projects. An election win for Donald Trump has given further impetus to the confidence in the crypto sector and thus forms a favourable ground for block to mine bitcoins. Although revenues and profits missed expectations, the current businesses, mainly mining equipment and self-custody services, may have more synergies with the new administration’s proactive regulation.

For Block, this restructuring illustrates their willingness to lean into the mining ecosystem and factor in market dynamics towards a shifting brand focus primarily towards self-custody and decentralized finance sectors that are currently receiving traction. Keep following TheBITJournal and keep an eye on the progress of Bitcoin mining.

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