Recently, the US mobile payment giant Block (formerly Square) announced that its cash app Cash App has officially integrated the Lightning Network, allowing users to conduct bitcoin transactions for free.
This is another major move following Square’s determination to embrace the blockchain space when it changed its name last December.
The company already has a consumer payment app Cash App, music streaming service Tidal, seller services ecosystem Seller and multiple bitcoin and blockchain initiatives. Moreover, Block’s third-quarter 2021 financial report shows that bitcoin-related revenue is $1.82 billion, accounting for nearly 50% of total revenue.
As the founder of two listed companies, Twitter and Block, Jack Dorsey’s ambitions in blockchain and Bitcoin continue to expand, so much so that he resigned as Twitter CEO in November 2021 to concentrate on Operate Block.
However, can Block, which is following Facebook’s rebranding, rely on Dorsey’s vision for “decentralization” and his passion for Bitcoin to create a new business landscape?
Active transformation to the blockchain field
On December 10, 2021, Square, a digital payments company co-founded by Dorsey and James McKelvey in 2009, changed its name to Block.
This day is less than half a month after Dorsey announced that he was stepping down as Twitter CEO.
Block stated that the name change was to differentiate the Square brand, which was built for sell-side businesses, from corporate entities, while focusing on the blockchain business. This is similar to Facebook’s previous move to change its name to Meta.
In fact, in the months before and after this, Block’s actions in the blockchain field continued to accelerate the promotion of Bitcoin-related businesses.
On January 14 this year, Block officially announced that it will build an open Bitcoin mining system. Dorsey first revealed the plan on Twitter in October last year, which is to build a bitcoin mining system based on custom chips and open source forms for individuals and companies around the world.
On the same day, Thomas Templeton, general manager of Block Hardware, also tweeted that the goal of the program is to make mining Bitcoin more decentralized and efficient. He also mentioned that Block hopes to solve the pain points and technical challenges encountered by mining customers, including the scarcity of mining machines, high prices, and high power consumption.
It is worth noting that recently, chip giant Intel also announced its entry into the Bitcoin mining hardware market and launched an “ultra-low voltage Bitcoin mining ASIC”. This also means that large technology companies such as Intel and Block will become competitors with companies such as Bitmain to compete for the mining market.
The move from Square to Block partly reflects Dorsey’s ambitions, and it’s no surprise that Block is committed to building an open mining ecosystem.
On the one hand, Dorsey is a well-known Bitcoin enthusiast; on the other hand, Block, which has long focused on payments, is constantly adding different business units.
Block launched Cash App, a mobile payment app, in 2013, while opening up bitcoin transactions in early 2018. The latest news is that Cash App will integrate the Bitcoin Lightning Network in the coming weeks, allowing users to use the Lightning Network to send bitcoins for free to anyone anywhere in the world in seconds.
In addition to the core business of payment, Block is also trying to expand into other areas. In March 2021, it acquired a majority stake in the niche streaming music service Tidal; the company subsequently established the Bitcoin DeFi development platform TBD54566975.
In August 2021, Block made another move to acquire Afterpay, an Australian “buy now, pay later” company for $29 billion, aiming to enter the consumer lending space.
But the company is not content with that, it also plans to build a bitcoin hardware wallet and a decentralized bitcoin exchange. Additionally, Block is also one of the first public companies to include Bitcoin on its balance sheet.
For now, Dorsey wants Block to go beyond payments and build a portfolio of companies focused on the cryptocurrency space. But can his ambitions actually support the development of the business?
Marcus Sotiriou, an analyst at digital asset broker Global Block, believes that if the open-source bitcoin mining system built by Block can be integrated with its core business, Cash App, it could prompt more users to use bitcoin to pay for goods and services, thereby boosting mass comparisons Bitcoin adoption.
But some analysts point out that Block and Dorsey’s ambitions won’t pay off until a few years from now.
Dorsey’s blockchain ambitions
Dorsey founded Twitter in 2006 and served as the company’s CEO, but he was fired by Twitter in 2008 over management and absenteeism issues.
In 2015, Dorsey returned to Twitter to continue as CEO. However, he, the CEO of both companies, has come under fire and concern from Twitter activist investor Elliott Management Corp. in 2020.
While it’s hard to predict the extent to which Dorsey’s recent departure from Twitter was influenced by Elliott, Elliott was reportedly unhappy at the time that he split his time between leading Twitter and Square.
Today, Block is a fintech company with a market cap three times that of Twitter.
Dorsey has long been a supporter of Bitcoin. His Twitter profile is “#bitcoin,” but interestingly he’s not too keen on other cryptocurrencies.
Previously, Dorsey sold his first tweet for $2.9 million in the form of an NFT. Immediately after the transaction, he said he would convert the Ethereum earnings into Bitcoin and donate it to GiveDirectly.
At the Bitcoin Conference in Miami last June, Dorsey re-emphasized his love for Bitcoin.
Block, who has multiple bitcoin and blockchain plans at this stage, is giving him a chance to “show his talents.”
Block’s third-quarter 2021 financial report shows that the company’s total revenue was $3.845 billion, and Bitcoin-related revenue in the Cash App was $1.82 billion, accounting for nearly 50% of total revenue.
However, Block confirmed $6 million in Bitcoin impairments during the reporting period, and its Bitcoin investments have recorded three impairments to date.