Bullish on Bitcoin? Here’s why you should consider block stock.

Block (SQ -2.94%) CEO Jack Dorsey isn’t shy about his opinions on Bitcoin (BTC 0.05%). During a Bitcoin conference a few years ago, he said, “I don’t think there’s anything more important in my life to work on.” Dorsey believes Bitcoin will make finance more inclusive and empower underserved communities around the world, and Block is making strides in expanding its presence in the Bitcoin ecosystem.

In July, Scientific core agreed to buy Block’s newly developed hardware for its large-scale Bitcoin mining operations. If you’re a long-term bull on Bitcoin, here’s why Block could be the ideal stock for you.

Block’s continued push into Bitcoin

In 2018, Block made Bitcoin trading available to Cash app users. Since then, it has expanded how customers can acquire Bitcoin by converting a percentage of direct deposits into Bitcoin or by allowing users to round up transactions and convert that spare change into Bitcoin fee-free. Earlier this year, Block announced that it would invest 10% of its Bitcoin gross profit to purchase more Bitcoin.

The payments company, led by its Proto team, is also entering Bitcoin mining with its 3-nanometer mining application-specific integrated circuits (ASICs).

An ASIC is an integrated circuit chip designed for a specific purpose. For example, an ASIC miner is a chip designed exclusively for mining cryptocurrencies. These chips can be made to mine a particular cryptocurrency and are used in specialized computers that solve the cryptocurrency’s verification algorithms — a necessity as the network of miners has grown, increasing the difficulty of mining Bitcoin.

One problem with current mining ASICs is that their production is concentrated in a single supplier: Bitmain, a private company based in Beijing. According to Dorsey, miners have told him that Bitmain’s ASICs are inconsistent and have reliability issues, and that the mining rigs “fail a lot.”

“A New Paradigm for Bitcoin Scale Mining”

Block’s Proto team is developing a modular mining platform around its ASIC mining chip, which it claims offers efficiency, reliability and uptime in large-scale mining operations.

What sets Block’s ASIC chip apart is that it is 3 nanometers, compared to Bitmain’s 6 nanometer chip. 3 nanometer ASIC miners are the future of cryptocurrency mining because they can make more powerful and profitable mining rigs.

Image source: Getty Images.

Core Scientific has partnered with Block to develop the technology and is the first company to purchase Block’s new ASIC technology for large-scale mining operations.

Russell Cann, director of development at Core Scientific, says the chips help support its plans to increase the hash rate within its existing infrastructure and that it is working with Block “to define a new paradigm for mining at bitcoin scale, one designed to provide important operational benefits. while contributing to the longevity and vitality of the Bitcoin network.”

On the company’s latest conference call, Dorsey said that its 3-nanometer ASIC is more reliable, more open and configurable, and that “We have a very strong pipeline behind it.” He concluded with: “I am fully confident and have no doubt that this will be a significant business for us and we will take the majority of the market share.”

Is Block stock a buy?

Block is well positioned, with its Cash app being the most used investment app among all generations, according to The Motley Fool’s Generational Investing Tools survey. It is also in the midst of a multi-year transformation to streamline its business by increasing gross profit and operating margin as it seeks to reach the 40 rule.

Bitcoin is a small part of Block’s business, which is now dominated by its Square and Cash App products. However, it is diving deeper with its ASIC hardware for Bitcoin mining, and the deal with Core Scientific demonstrates its commitment to expanding its footprint in the Bitcoin ecosystem.

In the long term, Dorsey envisions integrating Block’s various businesses to make it a force to be reckoned with in the payments industry, making it an attractive investment if you’re a long-term Bitcoin bull.