Jack Dorsey, co-founder and executive chair of Block Inc., is making a high-stakes move into Bitcoin mining with Proto, the company’s new open-source mining initiative. Announced during Block’s fourth-quarter 2024 earnings call, the project aims to decentralize the industry and compete directly with dominant players like China-based Bitmain, which has long controlled the global supply of mining hardware.
“We do think the market is large, and we do think we’re poised to take a significant percentage of it because there is one player, really in this space, and customers want other options,” Dorsey said during the call. His comments reflect Block’s strategy to disrupt the mining sector by offering hardware solutions tailored to a broader range of users, including small-scale miners and independent operators.
Block’s move comes as the company navigates a mixed financial performance. The firm’s Q4 2024 earnings missed Wall Street expectations, reporting an EPS of $0.71 against a projected $0.86 and revenue of $6.03 billion, short of the $6.24 billion forecast. Despite this setback, Block remains bullish on its long-term prospects, with Dorsey emphasizing investments in AI, open-source innovation, and Bitcoin infrastructure as key priorities.
Proto: An Open-Source Alternative to Industry Giants
Proto represents a departure from the industry’s reliance on proprietary mining hardware. Block’s research found that existing mining solutions lacked customization, upgradeability, and reliability—issues that have long frustrated miners. Dorsey emphasized that many customers seek a full system that “just works off the shelf, that was built in the U.S.,” rather than being forced to rely on a single supplier.
The initiative includes ASIC chips, mining rigs, and developer tools designed to enhance transparency and adaptability in the mining sector. Block’s entry could challenge Bitmain’s stranglehold on the market, which has historically limited alternative hardware options. If successful, Proto could drive greater competition, reducing costs and increasing efficiency in Bitcoin mining operations worldwide.
Financial and Strategic Implications
While Block’s overall financial results fell short of expectations, the company remains committed to aggressive investment in Bitcoin-related initiatives. As of Q4 2024, Block held 8,363 BTC on its balance sheet, valued at over $821 million. The firm positions this investment as both a long-term store of value and a component of its broader Bitcoin ecosystem, which includes Cash App’s Bitcoin trading services.
The market response to Block’s earnings was initially negative, with shares dropping 7.15% in after-hours trading to close at $77.10. However, Proto’s rollout in 2025 could provide a catalyst for future growth. Dorsey suggested that Block expects “unexpected upside” in the mining business as customers adopt its hardware, potentially reshaping the economics of Bitcoin mining.
Looking ahead, Block will need to execute efficiently to convert Proto into a viable business segment. Competing against well-established players like Bitmain will require both technological superiority and strategic partnerships. If successful, Proto could mark a significant shift in the industry, providing a decentralized and customizable alternative for Bitcoin miners worldwide.
