Twitter founder Jack Dorsey's payment company Block plans to gradually shut down its decentralized technology development subsidiary TBD and reduce its investment in its music streaming platform Tidal. At the same time, the company will refocus on Bitcoin (BTC) mining equipment and the development of its self-custody crypto wallet.
Block stated in its third quarter shareholder letter: "We are reducing our investment in TIDAL and gradually winding down the TBD business, which gives us room to invest in our Bitcoin mining program that has strong product-market fit and a healthy demand pipeline, as well as our Bitcoin self-custody wallet Bitkey."
TBD was created by Block in June 2022 with the goal of developing "Web5" (distinct from the more commonly known Web3 concept) as "a set of technologies to improve the web with decentralized identity, personal data storage, and verifiable data exchange capabilities." The company previously launched a new business entity called "c=" focused on improving the liquidity and routing of Bitcoin Layer 2 scaling solution Lightning Network.
This restructuring is not entirely unexpected, as Block indicated earlier this year that it plans to lay off up to 10% of its workforce by the end of 2024, explaining that "our company's growth has far outpaced the growth of our business and revenues."
Block announced its third quarter financial results on Thursday, reporting total revenue of $5.98 billion, a 6.4% increase from the same period last year, but falling short of Wall Street analysts' estimates of $6.24 billion. Gross profit reached $2.25 billion, up 19% year-over-year, with the gross profit from the point of sale (POS) system Square being $932 million, a 16% increase from last year, and the gross profit from the payment app Cash App reaching $1.31 billion, a 21% increase.
Although Block does not operate a Bitcoin mining business, it sells equipment to companies engaged in mining. The payment company stated in April that it had completed the development of three-nanometer Bitcoin mining chips and is developing a complete Bitcoin mining system. In July, Bitcoin mining company Core Scientific announced it would adopt Block's mining machines for its operations.
Block is also focusing more on its self-custody wallet Bitkey, which was launched in March. At that time, the company stated that Bitkey not only provides standard wallet features but also connects to cryptocurrency exchange Coinbase and its own payment platform Cash App, allowing users to buy and sell Bitcoin.
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