Block's Proto outperforms China in Bitcoin mining chip race

Jack Dorsey, co-founder of Twitter and CEO of Block, claims his team has outdone China in Bitcoin mining chip development, with his fintech venture Proto set to launch a suite of mining chips on Aug. 14. Block plans to raise $1.5 billion for general corporate purposes. The U.S. leads in Bitcoin mining hash rate, but China dominates the manufacturing of mining rig equipment. President Trump's tariff policy targeting China raises concerns for the U.S. mining industry.

Block, Inc., led by Jack Dorsey, is set to revolutionize the Bitcoin mining industry with the launch of its Proto suite of mining chips on August 14. This move comes as the U.S. leads in Bitcoin mining hash rate but relies heavily on Chinese-made mining rigs, raising concerns about foreign control over critical infrastructure [1].

The new chips from Block use 3-nanometer technology, making them among the most advanced mining processors available. The company aims to become the first major American competitor to challenge the dominance of Chinese manufacturers like Bitmain, MicroBT, and Canaan, which control most of the $3-6 billion annual market [1].

Block's Chief Financial Officer, Amrita Ahuja, announced the launch during a Friday interview on CNBC’s Squawk Box. Dorsey hinted at the launch on social media platform X the day before. The timing is crucial for Block, which reported a $93.4 million loss on its Bitcoin holdings in the first quarter, compared to a $233.4 million gain the previous quarter [1].

Proto Mining's open-source strategy sets it apart from other mining chip makers. By making the chip's design open-source, Block allows other developers to see the chip’s design and suggest improvements, fostering a new developer ecosystem around mining [1]. This approach could help smaller mining operations compete with large industrial farms, potentially lowering costs and increasing options for miners.

Core Scientific, one of the largest public Bitcoin mining companies, has already agreed to buy Proto chips. The deal will provide Core Scientific with 15 exahashes per second worth of mining power, representing a 60% increase to the company’s current mining capacity [1]. The agreement is one of the largest Bitcoin mining chip deals announced in terms of total computing power.

The Proto chip launch comes as the U.S. has become the world’s largest Bitcoin mining country, with American miners now controlling about 37% of the global network’s computing power [1]. However, most of the mining equipment in America still comes from Chinese manufacturers, creating potential security concerns for government officials.

Bitmain recently announced plans to open its first U.S. factory by early 2026, responding to the same trade tensions and government pressure that motivated Block’s domestic production strategy [1]. American chip maker Auradine, backed by mining company MARA Holdings, has asked the government to limit Chinese mining equipment, arguing that hundreds of thousands of Chinese machines connected to America’s power grid could pose security risks [1].

Block expects the Proto chip launch to help improve its financial performance in the second half of 2025. The company cut its profit growth forecast earlier this year due to economic headwinds and reduced consumer spending. The success of Proto will depend on whether it can offer better performance or lower costs than established competitors. Block’s open-source approach and American manufacturing could appeal to miners who want alternatives to Chinese suppliers [1].

Block is not the only U.S. company aiming to challenge China's dominance in Bitcoin mining equipment. Jack Dorsey believes his team has outdone China in Bitcoin mining chips, claiming that Proto will turn the industry upside down [2]. Block plans to raise $1.5 billion for general corporate purposes, further solidifying its commitment to Bitcoin and the broader cryptocurrency ecosystem [2].

The Proto chip launch is a significant milestone in Block's broader Bitcoin strategy. The company offers Bitcoin buying and selling through its Cash App, which serves 8 million customers. Block also makes the Bitkey hardware wallet and funds open-source Bitcoin projects through its Spiral initiative. Additionally, Block recently began rolling out Bitcoin payments for Square merchants, planning to offer this service to all 4 million Square sellers by 2026 [1].

Block's commitment to Bitcoin is evident in its monthly practice of converting 10% of its Bitcoin-related profits back into Bitcoin purchases. This long-term commitment underscores the company's vision of Bitcoin as a pivotal role in the future of finance [1].

References:
[1] https://bravenewcoin.com/insights/proto-mining-launches-american-made-bitcoin-chips-to-compete-with-bitmain
[2] https://www.thestreet.com/crypto/markets/jack-dorsey-claims-edge-over-china-in-bitcoin-after-massive-offering