Jack Dorsey's Strategic Pivot: How Block Is Abandoning Web5 to Pursue Bitcoin Mining Dominance

Jack Dorsey’s Block, the payments and financial services giant formerly known as Square, is undergoing a significant operational restructuring that signals a fundamental shift in its technological ambitions. The company has made the difficult decision to wind down Web5, its decentralized internet venture, and reduce investment in the music streaming platform Tidal. This strategic reallocation is freeing up substantial resources to accelerate Block’s bitcoin mining hardware initiative and expand its Bitkey self-custody wallet ecosystem.

The timing of this corporate pivot is noteworthy. Block announced these moves during a period of heightened optimism around cryptocurrency policy in the United States, following electoral developments that promised a more favorable regulatory environment for digital assets. For a company deeply invested in the crypto infrastructure space, this alignment of internal strategy with external market conditions represents a calculated bet on where the industry’s future growth lies.

The End of Web5: Why Block Is Retreating From Decentralized Internet Vision

Web5 represented an ambitious attempt to create what Block’s development division TBD described as “a group of technologies that enhance the Web with decentralized identity, personal data storage and verifiable data exchange capabilities.” Launched in June 2022, the project was Block’s answer to the broader Web3 movement, though positioned distinctly as a focus on user-centric decentralization rather than cryptocurrency-centric models.

However, ambitious visions often collide with market realities and capital constraints. The decision to scale back Web5 reflects a pragmatic acknowledgment that resources must be concentrated where Block has demonstrated tangible product-market fit. Unlike speculative infrastructure plays, Block’s mining hardware and self-custody wallet initiatives have already begun generating customer demand and revenue signals—concrete validation that was absent for the Web5 experiment.

This retreat also mirrors a broader industry trend where companies are abandoning purely exploratory blockchain infrastructure projects in favor of revenue-generating applications. The crypto sector, increasingly subject to regulatory scrutiny and market volatility, has forced companies to prioritize profitability over pure innovation theater.

Bitcoin Mining: Block’s Hardware Gamble Pays Off

The most striking element of Block’s restructuring is the accelerated investment in bitcoin mining equipment and systems. This represents a dramatic shift from the company’s historical focus on payments processing and financial inclusion technology. Yet the decision is grounded in solid operational metrics: Block’s mining hardware division has achieved strong product-market fit and maintains a healthy pipeline of customer demand.

The technical foundation for this push was laid in April 2024, when Block completed development of a cutting-edge 3-nanometer mining chip—a project that had been in development since April 2023. In the ultra-competitive mining hardware space, technological advancement at this scale represents a significant competitive advantage. The efficacy of Block’s systems was validated when Core Scientific, one of the largest bitcoin mining operators globally, announced plans to deploy Block’s mining rigs across its operations in July 2024.

Bitcoin mining profitability has faced considerable headwinds following the halving event earlier in 2024, which reduced mining block rewards by 50%. This development created widespread industry stress, as operational costs remained fixed while revenue streams were slashed overnight. For Block, however, the timing suggests a counterintuitive opportunity: as marginal miners exit the market due to reduced profitability, larger institutional operators like Core Scientific may seek technological solutions to maintain efficiency. Block’s 3nm chips, by reducing computational power requirements and energy consumption, directly address this pain point.

Bitkey: The Self-Custody Wallet as Strategic Anchor

Complementing the mining hardware push, Block is intensifying its focus on Bitkey, its self-custody bitcoin wallet product. Launched in March 2024, Bitkey represents Block’s attempt to own the user experience layer of bitcoin ownership—a critical step in capturing wallet-to-exchange relationships.

The wallet’s value proposition extends beyond simple asset custody. Bitkey integrates with Block’s Cash App payments platform and maintains partnerships with major exchanges like Coinbase, creating a seamless ecosystem for buying, selling, and managing bitcoin directly from the wallet interface. This integration strategy positions Bitkey as more than a security product—it becomes a gateway for driving transaction volume across Block’s payments ecosystem.

The Financial Pressure Behind Strategic Choices

Block’s third-quarter 2024 results provided the immediate context for these strategic announcements. The company reported revenue of $5.98 billion against Wall Street expectations of $6.24 billion—a miss that immediately triggered a 10% stock price decline. This earnings disappointment underscores the performance pressure that forced the restructuring decision.

The company had previously disclosed plans to reduce headcount by up to 10% by the end of 2024, citing a fundamental misalignment: “the growth of our company has far outpaced the growth of our business and revenue.” The Web5 and Tidal scaling-back announcements represent the operational manifestation of this efficiency drive.

The Bigger Picture: Policy Shifts and Market Positioning

Jack Dorsey’s repositioning of Block reflects a broader recognition that the cryptocurrency industry’s trajectory is shifting. Regulatory environments that seemed permanently hostile are warming. Bitcoin, once relegated to the margins of financial technology discourse, is entering mainstream institutional acceptance. Mining infrastructure, previously viewed as peripheral to crypto’s “real innovation,” is now recognized as fundamental to network security and protocol sustainability.

For Dorsey specifically, this pivot represents a return to core conviction. His public advocacy for bitcoin’s importance to financial infrastructure predates Block’s current strategic emphasis. The abandonment of Web5—an experimental technology built more on utopian ideals than demonstrated customer need—in favor of tangible bitcoin infrastructure suggests a maturation in how Block allocates capital and prioritizes technological bets.

The decision to wind down Web5 while expanding mining and self-custody initiatives is ultimately a vote of confidence in bitcoin itself—and a recognition that sustainable fintech businesses require revenue models, not just revolutionary rhetoric.