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The complexity of the bitcoin mining process has been a major drawback for a cryptocurrency that was designed to foster accessibility. Mining rigs are costly and difficult to locate, and there have even been concerns about the continued availability of the Chinese-manufactured chips powering them.
Block, the payments company formerly known as Square, announced it commitment to democratizing the bitcoin mining process. Block’s head, Jack Dorsey, said the company plans to produce a three-nanometer chip designed specifically for bitcoin mining. But he made waves when he posted that Block was also building a full bitcoin mining system.
“There aren’t a lot of specifics yet,” said James Wester, Director of Cryptocurrency at Javelin Strategy & Research. “One of the big challenges as bitcoin evolves, and as mining becomes more difficult in terms of both computing and cost, is that it will lose the decentralization that’s at the heart of what secures the network.”
Fostering Decentralization
Though there have long been concerns about big tech’s involvement in crypto, Block has stated its goal is to foster decentralization, not hinder it.
“We’ve spent a significant amount of time talking to a wide variety of bitcoin miners to identify the challenges faced by mining operators,” Block wrote. “Building on these insights and pursuant to our goal of supporting mining decentralization, we plan to offer both a standalone mining chip as well as a full mining system of our own design.”
Crypto has been a central part of the company’s rise to payments prominence. Block reported it held over 8,000 bitcoin, valued at $340 million, by the end of 2023. That’s not to mention the company’s $66 million in gross earnings from Cash App bitcoin transactions in Q4 2023, a 90% year-over-year jump.
Safeguarding Bitcoin
With so much riding on bitcoin, it’s understandable that Block would take steps to protect a mining process fraught with challenges. Mining bitcoin generates excessive heat and noise, while consumings vast amounts of energy. Dorsey has insisted that “bitcoin mining should be as easy as plugging a rig into a power source.”
Block’s initiative follows the recent bitcoin halving, which saw the number of bitcoin produced by miners reduced by half. However, Block’s plans are more focused on safeguarding bitcoin’s decentralization rather than pumping out crypto.
“Mining has been an issue for some time, but Jack Dorsey isn’t just looking at it as a philosophical problem; he’s actively working to address it,” Wester said. “We’ll wait for more specifics, but the move to make mining more accessible is certainly intriguing.”
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