Jack Dorsey Scales Back Crypto Plans for Block

Jack Dorsey, who co-founded Twitter, made headlines in the summer of 2021 during a surge in cryptocurrency popularity. At that time, Dorsey announced that Block, his payments company, was launching a new division called TBD. The aim of this division was to simplify access to non-custodial, permissionless, and decentralized financial services.

Dorsey emphasized that the primary focus would be on Bitcoin, declaring it on Twitter. In December 2021, he further transformed Square Inc. into Block, reflecting a deeper connection to blockchain technology, the underlying infrastructure of Bitcoin. The company’s previous crypto initiative, Square Crypto, was rebranded as Spiral.

However, as 2023 unfolded, it was evident that Dorsey was reevaluating this ambitious vision.

During Block's third-quarter earnings call on Thursday, Chief Financial Officer (CFO) Amrita Ahuja communicated that the company was "winding down" its TBD efforts. This marked a significant shift in the company’s strategy.

Despite this retreat from TBD, Block retains a substantial amount of Bitcoin, valued at around $630 million. The company plans to invest in a Bitcoin mining venture and its Bitcoin wallet, Bitkey, while still enabling users to purchase Bitcoin via Cash App.

TBD was envisioned as a platform for developers, with aspirations for creating Web5—a more decentralized and secure version of the internet. In mid-2022, Dorsey had indicated that Web5 could represent Block's most significant contribution to the digital world.

Nonetheless, the crypto landscape's dynamics began changing. With escalating inflation and rising interest rates in 2022, investors sought shorter-term returns. Consequently, Block's stock saw drastic declines, plummeting more than 80% from its 2021 peak.

In late 2023, Block announced plans to reduce its workforce from about 13,000 employees by up to 1,000 by the end of 2024. Reports have indicated layoffs within the TBD division in recent weeks. Additionally, the company reflected a scaling back of investment in Tidal, a music streaming service initially acquired for around $300 million in 2021, which was also part of the TBD venture.

When questioned about the current strategy surrounding Bitcoin in the recent earnings call, Dorsey reiterated the importance of accessibility. Dorsey shared that the goal is to enable more individuals to buy, sell, and send Bitcoin peer-to-peer.

He expressed his vision for the internet to feature a native currency, which he believes would expedite transaction processes and enhance the offerings of products like Cash App.

A Block representative confirmed Dorsey's focus as highlighted during the earnings call. However, their crypto ambitions seem strained amidst a more cautious market atmosphere. Following the earnings report, Block’s shares dipped by about 1% at closing on Friday, influenced by weaker-than-expected revenue projections and concerns over gross profit guidance.

In his detailed letter to shareholders, Dorsey mainly concentrated on the company’s lending services for small businesses. A significant portion of this revenue stems from Afterpay’s buy-now-pay-later offerings, reflecting a shift away from crypto discussions.

Dorsey, Bitcoin, Block