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Jack Dorsey’s payments company, Block, is building a system for bitcoin miners

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Jack Dorsey’s payments company Block (formerly Square) is going to start mining for bitcoin.

In a string of tweets, Block’s general manager for hardware, Thomas Templeton, laid out the company’s plans for next steps.

Templeton says the goal is to make bitcoin mining — the process of creating new bitcoins by solving increasingly complex computational problems — more distributed and efficient in every way, “from buying, to set up, to maintenance, to mining.”

The idea of making the mining process more accessible has to do with more than just creating new bitcoin, according to Templeton. Instead, he says the company sees it as a long-term need for a future that is fully decentralized and permissionless.

“Mining needs to be more distributed,” Dorsey wrote in a tweet in October, when he first floated the idea. “The more decentralized this is, the more resilient the bitcoin network becomes.”

Toward that end, the company is solving one major barrier to entry: Mining rigs are hard to find, expensive, and delivery can be unpredictable. Block says it is open to making a new ASIC, which is the specialized gear use to mine for bitcoin.

The project is being incubated within Block’s hardware team, which is beginning to build out a core engineering team of system, ASIC, and software designers led by Afshin Rezayee.

In terms of the hardware, Dorsey previously tweeted that the company was considering a “bitcoin mining system based on custom silicon.” Dorsey went on to share his thoughts on the need for more of a focus on vertical integration, as well as on silicon design, which he says is too concentrated among a few companies.

Templeton writes that Block also looking to improve reliability and the user experience of mining.

“Common issues we’ve heard with current systems are around heat dissipation and dust. They also become non-functional almost every day, which requires a time-consuming reboot. We want to build something that just works,” Templeton tweeted. “They’re also very noisy, which makes them too loud for home use.”

Democratizing access to bitcoin mining is a big part of the mission statement of this project.

“Mining isn’t accessible to everyone,” wrote Dorsey in October. “Bitcoin mining should be as easy as plugging a rig into a power source. There isn’t enough incentive today for individuals to overcome the complexity of running a miner for themselves.”

The announcement from Block comes just a few months after the U.S. eclipsed China for the first time ever as the world’s top destination for bitcoin miners. The U.S. is also flush with renewable power sources.

Washington State is a mecca for hydropowered mining farms. New York produces more hydroelectric power than any other state east of the Rocky Mountains, and it counts its nuclear power plants toward its 100% carbon-free electricity goal. Meanwhile, Texas’ share of renewables is growing over time, with 20% of its power coming from wind as of 2019. The Texas grid also continues to rapidly add more wind and solar power.

Texas also has a deregulated power grid with real-time spot pricing that lets customers choose between power providers, and crucially, its political leaders are pro-crypto. Those are dream conditions for miners who want a kind welcome and cheap energy sources.

“If you’re looking to relocate hundreds of millions of dollars of miners out of China, you want to make sure you have geographic, political, and jurisdictional stability. You also want to make sure there are private property rights protections for the assets that you are relocating,” said Darin Feinstein, co-founder of cryptocurrency mining operator Core Scientific.

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BUSINESS

5G Deployment: Nigeria approves Microsoft’s agreement, migration of C-Band services

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The federal government has approved an Enterprise Licensing Agreement for Microsoft products and the clearing up of C-Band Spectrum in order to accelerate the deployment of 5G services in the country.

In a statement, the Ministry of Communications and Digital Economy, on Thursday, said the approval was given during the meeting of the Federal Executive Council (FEC) last Wednesday.

This agreement is part of the federal government’s effort towards keeping the cost of IT projects within sustainable levels, the statement, signed by the Technical Assistant to Pantami, Dr Femi Adeluyi, revealed.

He said the agreement would give the government access to discounted prices and other cost benefits, as well as reduce project duplication across Federal Public Institutions (FPIs).

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Bitcoin posts its worst quarter in more than a decade

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Bitcoin on Thursday posted its worst quarterly loss in more than a decade.

The world’s largest cryptocurrency has lost around 58% of its value in the second quarter of 2022, according to data from CryptoCompare. Bitcoin has fallen from $45,524 at the start of the quarter and was trading just below $19,000 on Thursday, the last day of the three-month period.

This is the worst quarterly performance for bitcoin since the third quarter of 2011 when it lost 68.2% of its value.

Bitcoin is down 39.8% in June and is on pace for the worst month ever dating back to 2010 when it became available on exchanges, Coin Metrics data shows.

Meanwhile, ether is down 69.3% in the second quarter and is on track for its worst quarter on record, dating back to its inception in 2015, according to Coin Metrics data.

Coin collapse, 3AC liquidation
Cryptocurrency prices have come under intense pressure this quarter amid rampant inflation which has caused central banks around the world to raise interest rates and led to a sell-off in risk assets, such as stocks and digital coins.

The crash in prices has also exposed issues with a several cryptocurrency companies and projects, particularly those in the lending space and firms that are highly leveraged.

A number of high profile issues have come to light during the quarter.

In May, the algorithmic stablecoin terraUSD collapsed along with its sister token luna. A stablecoin is a digital currency pegged to a real-world asset. TerraUSD was supposed to be pegged one-to-one with the U.S. dollar. Some stablecoins such as tether are backed by real assets like fiat currencies and government bonds. But terraUSD was governed by an algorithm which effectively failed.

Then In June, crypto lending firm Celsius paused withdrawals for its customers citing “extreme market conditions.”

Meanwhile, cryptocurrency exchange CoinFlex halted withdrawals for customers last week also citing “extreme market conditions.” But the company also claimed long-time crypto investor Roger Ver owes it $47 million after his account went into “negative equity.” Ver has denied that he owes CoinFlex money.

And the liquidity crisis has also hit prominent crypto hedge fund Three Arrows Capital which has fallen into liquidation, CNBC reported on Wednesday.

The latest downturn is being described as a new “crypto winter” and has also impacted growth and hiring at companies. Coinbase and BlockFi announced plans to lay off staff.

How does this cycle compare to the past?
Jacob Joseph, research analyst at CryptoCompare, notes that in the previous boom and bust cycle, bitcoin fell from a peak of $19,871 in the fourth quarter of 2017 to a low of $3,170 in the fourth quarter of 2018, suffering a drawdown of 8%.

Joseph said a similar fall of 82.2% was seen in 2014 when bitcoin fell from a high of $1,239 in the fourth quarter of 2013 to a low of $221 in the second quarter of 2015.

“This suggests that we could be in for a further drawdown period if the current poor macroeconomic conditions continue to persist,” Joseph told CNBC.

Other investors have expressed bearishness. In May, Guggenheim Chief Investment Officer Scott Minerd, said bitcoin could drop to $8,000. At the time, the cryptocurrency was trading at around $30,000, representing a 70% fall.

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European markets set to retreat as caution persists after worst quarter since 2020

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European markets are set to pull back on Friday after suffering their worst quarter since the onset of the Covid-19 pandemic, as inflation and interest rate hikes continue to weigh on sentiment.

Britain’s FTSE 100 is seen around 38 points lower at 7,131, Germany’s DAX is set to fall by around 123 points to 12,661 and France’s CAC 40 is expected to drop by around 54 points to 5,869.

The pan-European Stoxx 600 index closed the second quarter of the year on Thursday down 9% — the worst three-month period since the early stages of the pandemic in 2020 — and was down 16.6% year-to-date.

Global market sentiment remains gloomy as the war in Ukraine shows no sign of abating and inflationary pressures continue to mount, prompting central banks to embark on aggressive monetary policy tightening and exacerbating fears of a global economic slowdown.

Shares in Asia-Pacific were lower overnight with Japan’s Nikkei 225 leading losses in the region, after the Bank of Japan’s quarterly business sentiment survey posted a sharp decline in the April-June period.

However, China’s manufacturing activity expanded at its sharpest rate for 13 months in June, boosted by resurgent output after the easing of Covid-19 lockdown measures.

U.S. stock futures also retreated in early premarket trade after the S&P 500 closed out its worst first-half performance since 1970, dropping 20.6% year-to-date by Thursday’s close.

Back in Europe, Reuters reported Thursday that the European Central Bank will on Friday begin a process of buying bonds from southern European nations, including Italy, Spain, Portugal and Greece. The ECB will reportedly use the proceeds from maturing German, French and Dutch debt, in a bid to cap spreads between their respective borrowing costs.

On the data front, a flash euro zone June inflation reading is due Friday morning, along with manufacturing PMIs from Germany, France, Italy and Spain.

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