Block, formerly Square, CEO Jack Dorsey has stated that the company is on track to launch its Bitcoin mining chip in 2025. Dorsey disclosed this information on the company’s first-quarter earnings call.
According to Dorsey, the company has made significant strides in its plan to build the mining chip and is unlikely to experience any delays due to uncertainties around international trade because it is building the product in the US.
Dorsey noted that Block has a strategic advantage because it is relying on domestic suppliers and producers. Although he did not mention anything specific to the ongoing tariff war between the US and several of its trading partners, the CEO implied that Proto production is immune from the effects.
He said:
“We have very close relationships with our vendors and manufacturers and we are building in the United States.”
Proto is a flagship Bitcoin mining chip that Block is working on to rival more established names such as Bitmain, MicroBT, and Canaan. Dorsey described the chip as a huge opportunity for Bitcoin miners due to its unique features.
These include the fact that it is open-source and will not just serve as a miner but also has other use cases. He noted that the chip will allow consumers to build novel platforms and innovative experiments and products within the ecosystem.
Dorsey added:
“This is a completely open-source initiative as well which allows us to get a lot of feedback from the community and also integrate any improvements right away and just build an entirely new developer ecosystem around mining which has not been done at scale before.”
Block is hoping that its chip will attract Bitcoin miners and allow it to stake its claim in the Bitcoin hardware market, which Dorsey had described as a $3-$6 billion revenue industry.
Block cuts guidance for 2025, citing macroeconomic conditions
Meanwhile, the foray into Bitcoin mining chip is part of Block’s effort to increase its revenue, which has become more important after it struggled in the first quarter. The fintech company reported $2.29 billion in gross profits, representing a 9% increase year-on-year.
Most of the profits came from Cash App, with $1.38 billion, which is a 10% growth YoY, while Square had $898 million, a 9% growth YoY. It also had adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $813 million.
However, this was below expectations, with a growth rate slower for CashApp and earnings per share being substantially lower than anticipated. The poor performance led to Block’s stock seeing a 21.20% decline.
The stock performance was further worsened by the fact that Block cut its forecast for its 2025 gross profit growth from 15% to 12%, and its projection of $2.45 billion for Q2 gross profit was also below Wall Street expectations.
The company attributes its poor performance to reduced consumer spending due to the macroeconomic environment and noted that this is why it cut its guidance.
It wrote:
“We are operating in a more dynamic macro environment, so we have reflected a more cautious stance on the macro outlook into our guidance for the rest of the year.”
Interestingly, Bitcoin’s struggles also affected its bottom line, with the company reporting a $93.4 million loss on its Bitcoin holdings compared to $233.4 million in gains in Q4. The unrealized loss is due to the Bitcoin price falling significantly in Q1.
Beyond recording a loss on its BTC holdings, the company’s revenue from facilitating Bitcoin trading on its platform also fell by 15.7% to $2.30 billion, a sizable drop YoY.
Despite the struggles, the company has promised to bounce back by the second half of the year, noting that it is currently launching new features that will help drive profit growth and user retention.
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