Block Inc. Shifts Focus to Bitcoin Mining, Plans to Wind Down Web5 Venture

Block Inc., the payments company founded by Jack Dorsey, is refocusing its efforts on the Bitcoin mining industry, while scaling back its investments in other ventures like TIDAL and TBD, a project centered around decentralizing the web.

In a November 7 shareholder letter, Block—formerly known as Square Inc.—announced plans to reduce resources allocated to its struggling music streaming service TIDAL and discontinue operations related to its Web5-focused subsidiary TBD. This strategic pivot comes as the company looks to ramp up its presence in the Bitcoin mining sector.

Block’s acquisition of TIDAL in 2021 for around $300 million was intended to expand the company’s portfolio beyond payments. However, the streaming service has faced stiff competition and ongoing struggles with user growth. Reports have indicated workforce reductions and a $132.3 million impairment charge in connection with the service’s underperformance.

Meanwhile, Block’s TBD initiative was launched in 2022 with the goal of creating a decentralized web ecosystem known as Web5. However, the company has now decided to wind down this project, though the exact reasons for the decision have not been disclosed.

A Strategic Pivot Toward Bitcoin Mining

Block’s decision to shift focus to Bitcoin mining comes at a time when the U.S. Bitcoin mining sector is gaining momentum. The announcement coincides with Donald Trump’s recent remarks about the U.S.

potentially becoming the dominant player in global Bitcoin mining, a stance that has reignited interest in the sector. In June, Trump highlighted Bitcoin’s potential to strengthen the country’s energy infrastructure, giving a boost to mining stocks and providing some much-needed optimism for an industry struggling with lower profitability due to the 2024 Bitcoin halving event, which reduced block rewards.

Block’s pivot seems to align with the renewed interest in U.S.-based Bitcoin mining, which the company believes has a "healthy pipeline of demand." While Block does not mine Bitcoin directly, it is heavily involved in developing mining equipment through its Proto initiative. Earlier this year, the company unveiled a 3-nanometer mining chip that will be integrated into the operations of Core Scientific, a leading Bitcoin mining firm.

Expanding into Self-Custodial Wallets

In addition to its focus on mining equipment, Block will allocate resources to its Bitkey project, a self-custodial hardware wallet launched in March 2024. The Bitkey wallet is designed to allow users to store Bitcoin securely while also enabling purchases through traditional channels, leveraging partnerships with exchanges and payment providers.

Financial Challenges and Restructuring

Block’s strategic shift follows a disappointing financial report for the third quarter of 2024, with the company’s revenue coming in at $5.98 billion, missing analysts’ expectations of $6.24 billion. This miss follows significant restructuring within the company, including layoffs across its Cash App, Foundational, and Square divisions earlier this year. Additionally, around 40 employees from TIDAL were laid off in December 2023.

Growth in U.S. Bitcoin Mining Sector

As Block narrows its focus on Bitcoin mining, other U.S.-based miners have been expanding operations. In September, CleanSpark acquired seven Bitcoin mining facilities in a bid to increase its hashrate to 37 EH/s by the end of 2024. Meanwhile, Marathon Digital Holdings raised $292.5 million in August to fund its strategic expansions. A report from H.C. Wainwright & Co. in Q3 2024 also highlighted a 4.5% increase in the hash rate of publicly traded Bitcoin miners.

Block’s decision to refocus on Bitcoin mining signals a shift toward an industry that continues to grow, despite its challenges, and may offer the company new avenues for profitability in the coming years.