Square CEO Jack Dorsey said in a tweet last week that the payments company might build a bitcoin mining rig. The machine, essentially a desktop PC optimized for crunching numbers rather than running consumer applications, would be an open-source project, meaning Square would release the schematics so anyone could build the machine themselves.
Foundational to bitcoin is its decentralized nature — transactions are processed by miners, individuals who use intense amounts of processing power to verify transactions and allow them to clear. This process is vital to keeping the network running, and miners are rewarded in turn with cryptocurrency in the form of processing fees.
Native internet currency — Cryptocurrencies including bitcoin have been criticized for their intense energy usage — much mining was done in China until recently, thanks to cheap energy, but warehouses of rigs have also been located in other places with ideal conditions, like Iceland where a consistently cold climate means there’s less need to pay for cooling systems. Dorsey said in a follow-up to his initial tweet that bitcoin networks need to become more energy efficient.
Square was a fairly early adopter of bitcoin, allowing its 40 million users of the Cash app to buy and sell the currency. Dorsey has called bitcoin the “native currency of the internet” because it’s consensus-driven — any changes to the currency must be approved by a majority — and built by “everyone,” because there’s no central governing body. Because bitcoin is an open-source protocol, it’s not burdened by the legacy banking systems that are incompatible and make a simple transfer take one or two business days. Users of Venmo could send money to Cash App users seamlessly because both apps speak the same language, and more services could be developed that use digital currency because traditional banks aren’t getting in the way.
Not without challenges — Sending a bitcoin, in theory, should be as easy as sending an email. There are problems, though, notably a relatively high cost to process transactions due to energy prices and a limited amount of miners on the system. Adding more miners could help alleviate this strain.
"We believe there needs to be a global native currency for the internet,” Dorsey said last year. “Just as everyone should be able to participate in the economy and have access to the same tools and services, so too should everyone be able to participate in cryptocurrencies and have access to its underlying innovation.” He continued that he sees Square as providing the tools to make it easy for people to use bitcoin, which could, in turn, generate a lot of revenue for the company.
Square recently said its revenue from bitcoin amounted to $2.72 billion in the second quarter of 2021, with gross profit coming in at $55 million.
Bitcoin is currently priced at over $61,000 per coin. The currency has long remained stubbornly a speculative asset — people buy and hold it rather than use it like an actual currency. Making it easier to actually use bitcoin could change that, and maybe the price would start to make some semblance of sense rather than be couched entirely in hopeful projections for its potential. More mining rigs would, theoretically, bring down the cost of using bitcoins and speed up transaction times.