Analysts Seek More Data on Jack Dorsey's Block Crypto Earnings Potential
Jack Dorsey-led payments technology firm Block (SQ.N) is making significant strides towards becoming a formidable player in the crypto mining industry. However, Wall Street analysts emphasize that detailed information on profit margins is crucial to accurately gauge the earnings potential of this new business venture.

Jack Dorsey-led payments technology firm Block (SQ.N) is making significant strides towards becoming a formidable player in the crypto mining industry. However, Wall Street analysts emphasize that detailed information on profit margins is crucial to accurately gauge the earnings potential of this new business venture.
On Wednesday, Block inked its first major crypto mining hardware deal, agreeing to supply its chips to bitcoin miner Core Scientific (CORZ.O). Despite the significance of this agreement, financial details were not disclosed, leaving analysts seeking more transparency.
J.P. Morgan has estimated that the deal could generate between $225 million and $300 million for Block. Nevertheless, the bank stated that more information is required to fully evaluate the long-term earnings potential of the hardware business. "We have more to learn in terms of margins of this business, so we are hesitant to underwrite this until we learn more around cadence and economics," J.P. Morgan commented.
This deal marks a pivotal moment for the payments company, which was originally founded as Square in 2009. The firm rebranded itself as Block in 2021, reflecting its shift towards a focus on crypto and blockchain technologies.
Dorsey, who co-founded and previously led Twitter (now known as 'X'), has long been an advocate of bitcoin. In April, Block began investing 10% of its monthly gross profit from bitcoin products directly into bitcoin. By the first quarter, nearly 9% of the company's cash, cash equivalents, and marketable securities were held in the form of bitcoin.
Analysts from Macquarie, Paul Golding and Emma Liang, noted in a report that "This development (the Core Scientific deal) is further evidence of Block as an emerging leader in the crypto hardware ecosystem." They suggested that subsequent similar deals could further solidify Block's reputation in the industry.
Despite the positive outlook from some analysts, J.P. Morgan highlighted that Block's stock performance would largely be driven by its other segments, such as Square and Cash App. To date, Block's shares have dropped nearly 17% this year.
The strategic move into the crypto mining sector underscores Block's commitment to expanding its footprint in the cryptocurrency industry. However, the lack of financial specifics surrounding the Core Scientific deal raises questions about the immediate profitability and long-term sustainability of this venture. Investors and analysts alike are keen to understand the economic model and profitability margins before making substantial endorsements.
The pressure is on Block to provide more comprehensive data to support the optimistic projections related to its crypto hardware initiatives. The firm's ability to offer transparent financial disclosures will be pivotal in gaining investor confidence and demonstrating the true potential of its foray into the crypto mining hardware market.
As the company continues to navigate its new path, the market will be closely monitoring its performance across all segments. The success of Block's core businesses, Square and Cash App, will play a crucial role in stabilizing its stock and ensuring overall growth. In the meantime, the crypto community and financial analysts remain watchful, anticipating further details that could either validate or challenge the initial projections of Block's foray into the crypto mining hardware sector.