Square CEO Jack Dorsey noted in a tweet last week that the payments company could build a Bitcoin mining platform. The machine, essentially a desktop PC optimized for calculating numbers rather than running consumer applications, would be an open source project, meaning Square would publish the schematics so that everyone could build the machine themselves.
The decentralized nature of bitcoin is fundamental: transactions are processed by miners, people who use intense processing power to verify transactions and allow them to erase them. This process is vital to keeping the network running, and the miners are in turn rewarded with cryptocurrency in the form of processing fees.
Native Internet Currency – Cryptocurrencies, including bitcoin, have been criticized for their intense energy consumption – much of the mining was done in China until recently, thanks to cheap energy, but warehouses of rigs were also located in other places with ideal conditions, such as Iceland where a consistently cold climate means there is less need to pay for cooling systems. Dorsey said in a follow-up to her initial tweet that bitcoin networks need to become more energy efficient.
Square was an early adopter of bitcoin, allowing its 40 million Cash app users to buy and sell the currency. Dorsey called bitcoin the “native currency of the Internet” because it is built on consensus – any change to the currency must be approved by a majority – and built by “everyone” because there is no central governing body. Since Bitcoin is an open source protocol, it is not overloaded by legacy banking systems which are incompatible and cause a simple transfer to take one or two business days. Venmo users could send money to Cash App users seamlessly, as both apps speak the same language, and more services could be developed that use digital currency, as traditional banks don’t get in the way.
Not without challenges – Sending a bitcoin, in theory, should be as easy as sending an email. There are issues, however, including a relatively high cost to process transactions due to energy prices and a limited number of miners on the system. Adding more miners could help ease this tension.
“We believe there must 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, everyone should also be able to participate in cryptocurrencies and have access to their underlying innovation. Square as providing the tools to make bitcoin easier to use, which in turn could generate a lot of revenue for the business.
Square recently said that its bitcoin revenue was $ 2.72 billion in the second quarter of 2021, with gross profit of $ 55 million.
Bitcoin is currently priced at over $ 61,000 per coin. Money has long stubbornly remained a speculative asset – people buy and hold it rather than using it as real money. Really facilitating use Bitcoin could change that, and maybe the price would start to make some semblance of sense rather than being fully framed in optimistic projections for its potential. More mining rigs would theoretically reduce the cost of using bitcoins and speed up transaction times.