Latest / The Pivot Podcast with Fexingo: How Businesses Change Direction and Survive Disruption / How Block Turned Square Into a Bitcoin Powerhouse
Transcript
- Lucas: There are pivots that happen because a company is about to die, and then there are pivots that happen because a founder sees an entire industry shifting before anyone else does. Jack Dorsey's Block — formerly Square — falls squarely into the second category. Luna: And it's a fascinating case because Block didn't just change its business model — it changed its entire identity. The company literally changed its name to signal the pivot. Lucas: Right. In December 2021, Square rebranded to Block. The idea was that 'Square' had become synonymous with the little white credit card reader you see at farmer's markets and coffee shops. But the company had grown far beyond that. It owned Cash App, it had acquired music streaming service Tidal, and it was quietly accumulating Bitcoin on its balance sheet. Luna: Let's talk about that Bitcoin bet, because it's the most aggressive move any major public company has made in crypto — outside of MicroStrategy, which is essentially a Bitcoin holding company. Lucas: Exactly. In October 2020, Square announced it had purchased roughly $50 million worth of Bitcoin. Then in early 2021, it added another $170 million. At today's prices, that original $220 million investment is worth somewhere north of $500 million. But here's the thing — this wasn't just a treasury play. Dorsey saw Bitcoin as a tool for financial inclusion. Luna: And that's where Cash App came in. Cash App allowed users to buy and sell Bitcoin directly inside the app. By 2021, Bitcoin trading accounted for a huge chunk of Cash App's revenue — something like 50 percent of its total gross profit at one point. Lucas: But that volatility cuts both ways. In early 2022, when Bitcoin prices dropped, Cash App's Bitcoin revenue dropped with it. The company had to prove that its core payments business — the original Square merchant services — was still the solid foundation. Luna: And did they prove it? I mean, Square's merchant business has been growing, but it's not exactly explosive. The real growth engine is Cash App. Lucas: That's right. Cash App has evolved from a simple peer to peer payment app into a full-fledged financial services platform. You can get a debit card, deposit your paycheck early, buy stocks, file your taxes, and yes, trade Bitcoin. Block is basically trying to build a bank for the unbanked — without calling itself a bank. Luna: And that's a classic pivot playbook: start with one simple product, build trust, then layer on more services. But Block also made some moves that seemed to diverge from its core mission. The acquisition of Tidal, for example — that was about giving artists better tools and fairer compensation, but it didn't have an obvious connection to payments or Bitcoin. Lucas: That one always struck me as Dorsey's passion project. He's a music guy, and he wanted to experiment with streaming royalties using Bitcoin's Lightning Network for micropayments. But from a business perspective, Tidal hasn't moved the needle. The real strategic pivot is happening on two fronts: Bitcoin infrastructure and decentralized finance. Luna: Let's dig into the Bitcoin infrastructure piece. In 2023, Block announced it was building an open-source Bitcoin mining system. The goal was to make mining more decentralized and accessible — because right now, mining is dominated by a few giant players like Bitmain. Lucas: And that's a huge engineering challenge. Bitcoin mining hardware is incredibly specialized. But Block has the cash, the talent, and the patience to invest in it. They also launched a hardware wallet called Bitkey — a device to help people store their own Bitcoin securely. So they're going after both ends of the Bitcoin ecosystem: the mining side and the consumer storage side. Luna: But does this pivot actually make business sense? I mean, Block's core audience is small business owners and Cash App users. Are those the same people who want to build their own Bitcoin mining rigs? Lucas: That's the tension. Dorsey is a Bitcoin maximalist — he genuinely believes Bitcoin will become the native currency of the internet. So he's positioning Block to be the infrastructure provider for that future. But in the near term, the company's valuation depends on its ability to grow Cash App and Square merchant services. The Bitcoin bets are long-term options. Luna: And speaking of valuation, Block's stock has been a roller coaster. It hit an all-time high of around $275 in 2021, then dropped below $60 in 2022. As of mid-2026, it's somewhere in between — recovering but still volatile. How do investors judge a company that's essentially running two separate businesses? Lucas: It's a real challenge. On one hand, you have the stable, predictable payments business with recurring revenue. On the other, you have a speculative Bitcoin play that could pay off massively or could blow up if crypto regulations turn hostile. The market has struggled to assign a single valuation to that mix. Luna: So let's compare Block to its peers. PayPal also launched crypto trading, but it didn't go all-in on Bitcoin like Block did. Robinhood has crypto, but it's more of a brokerage feature. Square's pivot is unique because it's trying to build a parallel financial system. Lucas: Right. And that's where the name 'Block' becomes meaningful. It's a reference to blockchain, but it also evokes the idea of building blocks — modular pieces of financial infrastructure. Dorsey has said he wants Block to be like the operating system for the economy of the future. Luna: That's an ambitious vision. But what about the risks? Regulation is the big one. The SEC has been aggressive with crypto companies. Block's Bitcoin-related activities could attract scrutiny, especially if they start offering more DeFi services. Lucas: Absolutely. And there's also the risk that Bitcoin doesn't become the global currency that Dorsey imagines. It could remain a digital gold — a store of value but not a medium of exchange. If that happens, Block's investment in mining and payment infrastructure might not generate the returns they're hoping for. Luna: But here's what I find interesting: even if Bitcoin doesn't take over the world, Block's core payments business is still solid. Square processes billions of dollars in transactions every quarter. Cash App has tens of millions of monthly active users. So the pivot doesn't jeopardize the base business — it's a bet on top of a strong foundation. Lucas: That's the smart way to do a pivot. You don't abandon your existing revenue stream while you explore the new one. You fund the new initiative with profits from the old one. Block is doing exactly that. Luna: Speaking of funding new initiatives, it's worth noting that Block has been able to make these long-term bets partly because they don't have to answer to quarterly earnings pressure in the same way as some other companies. Dorsey has dual-class shares that give him majority voting power. Lucas: Right. Founder control gives him the freedom to pursue a vision that might be unpopular with short-term investors. That's both a strength and a risk. If the vision doesn't pay off, there's no one to hold him accountable except the board. Luna: Let's look at a concrete example of how the pivot is showing up in Block's recent financials. In their most recent quarterly report, Cash App generated $1.5 billion in revenue, while Square's merchant segment brought in about $2 billion. But the Bitcoin revenue — which was huge in 2021 — has become a smaller share. That's actually a good sign: it means the core businesses are growing. Lucas: And on the profitability side, Block has been investing heavily in R&D for the Bitcoin mining hardware and the wallet. Those investments are weighing on earnings. But the company still generated positive free cash flow in the last two quarters. So the base business is healthy enough to fund the experiments. Luna: One of the most controversial experiments was the 'Block of Blocks' — a decentralized exchange protocol they started developing in 2024. It's essentially a way for users to trade Bitcoin and other assets without a central intermediary. That would directly compete with exchanges like Coinbase. Lucas: And that raises an interesting question: is Block trying to become a bank or an exchange or a payments company? The answer is all of the above. And that's the essence of the pivot — from a single-purpose tool to a multi-purpose financial platform. Luna: I think that's a good moment to step back and ask: what can other businesses learn from Block's pivot? First, don't pivot away from your core — pivot around it. Second, use your stable revenue to fund speculative R&D. Third, be willing to embrace a technology even if it's controversial. Lucas: And fourth, have a leader with conviction. Jack Dorsey's bet on Bitcoin is deeply personal. He's not doing it because it's the hot trend — he's been talking about Bitcoin since 2013. That kind of founder conviction can sustain a pivot through the tough years. Luna: Yeah, I think that's a crucial point. Conviction matters, but so does adaptability. Block has shown that it can adjust its strategy based on market conditions. When Bitcoin trading slowed down, they focused more on Cash App's banking features. They're not dogmatic — they're strategic. Lucas: So where does Block go from here? The Bitcoin mining hardware is still in development. The Bitkey wallet launched but hasn't seen mass adoption yet. The DeFi exchange is a long shot. But if even one of those bets pays off, it could transform the company. Luna: And if none of them pay off? Block still has a strong payments business. That's the beauty of the pivot — it's a call option on the future with limited downside. Lucas: Exactly. And that's what makes Block one of the most interesting pivot stories of the decade. It's not a desperate turnaround — it's a calculated expansion into a new frontier. Luna: Before we wrap up, I want to connect this to something practical. We talk about these strategic pivots every week, and I know a lot of our listeners are entrepreneurs or product leaders who are thinking about their own pivots. If this kind of deep-dive analysis has helped you clarify your thinking or given you a framework for your own decisions, that's exactly why we do this show. Lucas: And we keep the show ad-free because we want it to be a resource, not a commercial. So if you've gotten value from episodes like this one, and you want to help us keep the podcast independent and open to everyone, the simplest way is to support us at buy me a coffee dot com slash fexingo. Luna: It's just a small gesture — like buying us a coffee — but it makes a real difference in keeping the lights on and allowing us to spend the time to research these stories properly. No pressure, but we appreciate every bit of support. Lucas: And we're not going to interrupt the show with ads or ask for recurring subscriptions. It's a one-time thing if it feels right to you. And now, back to Block's story — because I think there's one more angle worth examining. Luna: Yeah, what about the international expansion? Square started in the US, but Cash App has been rolling out in the UK and other markets. How does the pivot translate globally? Lucas: That's a great question. International expansion is actually a key part of the pivot. In countries with less developed banking infrastructure, a mobile-first financial platform like Cash App could be even more valuable. Block is piloting Bitcoin-based cross-border payments, which could be cheaper and faster than traditional remittance services. Luna: So the pivot isn't just about new products — it's about new geographies. Block is essentially betting that the combination of payments, banking, and Bitcoin will resonate more strongly in emerging markets than in the US. Lucas: Exactly. And if that bet pays off, Block could become a truly global financial platform. But it's a long road. Regulatory hurdles, local competition, and infrastructure challenges are significant. Still, it's a logical extension of the pivot. Luna: Alright, Lucas, any final thoughts on Block's pivot? Lucas: I think the key takeaway is that pivots don't have to be all-or-nothing. Block has managed to transform itself while keeping its original business strong. It's a lesson in strategic patience and the power of having a founder who's willing to bet big on the future. Luna: And on that note, we'll leave you with a question: What's the one technology you believe in so much that you'd be willing to bet your company on it? Thanks for listening.