Twitter and Square Chief Executive Jack Dorsey announced that he is mining Bitcoin using a remote third-party service called Compass mining. The service is one among many that offers to host the necessary equipment for Jack to secure the Bitcoin network and compete for block rewards.
Dorsey has strongly defended the Bitcoin mining process when global regulators pressured the community over misguided assumptions about fossil fuel usage. Tesla CEO Elon Musk was among the loudest critics of Bitcoin’s allegedly outsized carbon footprint too, announcing he would suspend the use of Bitcoin for Tesla products until mining becomes sustainable, despite no bitcoin sales being recorded.
Jack Dorsey’s digital payment firm Square also recently issued a white paper entitled, “Bitcoin is Key to an Abundant, Clean Energy Future.”
“Bitcoin miners are unique energy buyers,” the paper says. It adds that Bitcoin miners offer flexibility and can be based anywhere around the world with an internet connection.
“By combining miners with renewables and storage projects, we believe it could improve he returns for project investors and developers, moving more solar and wind projects into profitable territory,” the paper said.
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Square, which generated billions of dollars in revenue in the second quarter this year, recently announced a partnership with tech and infrastructure provider Blockstream Mining to build a solar-powered mining operation.
“The facility will be a proof-of-concept for a 100% renewable energy bitcoin mine at scale with the economics of the build-out, including operational costs and return on investment, made open to the public,” Blockstream said in a press release.
What is Bitcoin mining?
Bitcoin mining is created through a process called proof-of-work. The process requires high-powered computers that are required for transaction verification which in turn receive rewards in bitcoin.
In other words, the most valuable cryptocurrency runs on a distributed ledger or decentralised computer network that stores and tracks transactions. When a block is verified by the network, a new ledger entry is created and new bitcoin is created or mined.
How does the remote hosting service work?
Companies like Compass Mining rent out hardware, space and other facilities necessary for bitcoin mining. While running contrary to the ethos of decentralisation, not everyone can host personal bitcoin mining rigs. As such, remote hosting services provide a choice to mine Bitcoin with convenience.
“The goal of Compass’ business model is to allow anyone to mine Bitcoin with access to the same sorts of power costs, hardware supply, and rackspace that the world’s largest and most heavily financed miners enjoy,” Zack Voell, Compass’s director of content and research, told Decrypt.
Investors buy the ASIC rig, after which the mining company installs the processor and takes care of the operational side of things. Needless to say, you’d be required to choose a mining pool and provide an address to earn rewards.
Why is Dorsey using a remote service to mine Bitcoin?
The entrepreneur has yet to elaborate on his future mining plans, but the vague tweet implies that Dorsey might be using the platform as a testing ground for his fintech company’s Square Cash App, which allows users to buy, sell, send and receive Bitcoin. Is Dorsey setting up the rails for Square’s users to help secure Bitcoin network?
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