In a significant development for corporate Bitcoin adoption, Jack Dorsey’s Block (formerly Square) is demonstrating a powerful use case for its digital asset holdings. The company is leveraging the power of the Lightning Network to generate substantial returns on its Bitcoin reserves.
How Block Earns 9.7% Bitcoin Yield
According to Miles Suter, Block’s Bitcoin product lead, as cited by CoinDesk, Block is achieving an impressive 9.7% annual yield on its Block Bitcoin holdings. This yield is not generated through traditional lending or staking mechanisms but rather through the active use of Bitcoin for payments via the Lightning Network.
The yield, estimated to be around $1 million per year, comes from routing payments through its own Lightning service provider, known as c=. This highlights a practical and profitable application of the Lightning Network for businesses holding Bitcoin.
Lightning Network Integration and Future Plans
Block is increasingly integrating the Lightning Network into its operations. Currently, 25% of Block’s outbound Bitcoin payments are processed using this layer-2 scaling solution. The company has ambitious plans to expand this usage significantly.
Block aims to make Lightning-based payments available to all its Square sellers by the year 2026. This expansion could dramatically increase the volume of transactions on the Lightning Network and further demonstrate its viability for mainstream commercial activity. The move signals Block’s commitment to Bitcoin and the Lightning Network as key components of its future payment infrastructure.
Why This Matters for Jack Dorsey’s Block
This strategy provides a dual benefit for Jack Dorsey Block. Firstly, it allows the company to earn a significant yield on its non-productive Bitcoin assets, adding directly to its bottom line. Secondly, it serves as a real-world stress test and promotion of the Lightning Network’s capabilities, which aligns with Dorsey’s vision for Bitcoin’s role in global finance.
The success Block is seeing could encourage other companies holding Bitcoin to explore similar yield-generating strategies using the Lightning Network, potentially driving further adoption and development of the technology.
Conclusion
Block’s achievement of a 9.7% annual Bitcoin yield through Lightning Network payment routing is a notable milestone. It showcases a practical and profitable application of Bitcoin beyond just a store of value. As Block plans to roll out Lightning payments to all Square sellers by 2026, the impact on the network and the broader crypto ecosystem could be substantial, demonstrating the potential for efficient and low-cost transactions.
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