Twitter and Square Chief Executive Officer Jack Dorsey announced this week that he is mining Bitcoin (BTC) through a third-party service called Compass Mining. The service hosts equipment necessary for him to secure the network and compete for its rewards.
Previously, Dorsey has strongly defended the Bitcoin mining process when global regulators raised questions over its use of fossil fuel. Tesla CEO Elon Musk was among the biggest critics of Bitcoin mining’s carbon emission. He announced that he will suspend the use of Bitcoin for Tesla products until mining becomes sustainable.
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 the returns for project investors and developers, moving more solar and wind projects into profitable territory," the paper said.
Square, which generated billions of dollars in Bitcoin revenue in the second quarter, recently announced a partnership with blockchain technology provider Blockstream Mining to build a solar-powered Bitcoin mining facility.
“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?
The de-facto crypto leader Bitcoin is created through a mining process known as proof-of-work. The energy-intensive process involves the use of high-power computers to solve the complicated mathematical problems of transaction verification. Miners receive rewards and other perks for Bitcoin mining.
In other words, the most valuable cryptocurrency runs on a distributed ledger or decentralized computer network that stores and tracks transactions. When the transaction is verified and processed by the network, the new Bitcoin will be created or mined.
How does the remote hosting service work?
Companies like Compass Mining have gained significant traction pioneering a new business model of renting out hardware, space, and other facilities necessary for Bitcoin mining.
With the help of Compass, one can remotely mine Bitcoin.
“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.
You only need to buy the ASIC rig. It will be installed in the compass mining global facilities based on your choice. After that, you will also be required to choose the mining pool and provide a public Bitcoin address to earn rewards.
It's important to note that you will be the owner of the physical ASIC, and you will pay the rent and electricity costs. The price of U.S.-based Antminer rigs starts around $8,200, with an average earnings potential per day of $33, according to the company’s website.
Why is Dorsey using Compass for Bitcoin mining?
While Dorsey has yet to elaborate more about his future mining plans, the vague tweet has raised a lot of questions and speculations.
Some believe the billionaire is using Compass Mining platform as an education trial run for his fintech company Square's Cash App, a platform that allows its users to buy, sell, send and receive Bitcoin. Others are considering it as a personal interest.
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