Proto Mining Rig | A New Paradigm for Bitcoin Mining?

When I spoke to Dorsey back in January, he explained that Block’s goal is to make mining technology more accessible.

“It’s not just about finding the Bitcoin; it’s securing the network as well. That’s part of the role of the miner.”

Jack Dorsey, Block Head & Chairperson of Block, Inc.

As the CEO of a large-scale mining operation, I’m most interested in whether the new hardware will help reduce costs long-term and fit neatly into existing infrastructure.

But mining companies must also recognize the need for hardware decentralization and the facilitation of a more robust network overall, not just improvements to our bottom line.

Over the last five years, we have seen very few meaningful innovations in Bitcoin mining hardware, as manufacturers have focused mainly on incremental efficiency gains.

The closest thing to an “innovation” is that many manufacturers are returning to the server rack form factor typically found in data centers. Block is aiming to take the industry in a completely different direction, towards innovation, competition, and long-term efficiency.

By now, you’ve probably seen the comparison charts, and no, Proto is not the most powerful pound-for-pound model.

The Antminer S21XP carries an efficiency of 13.5 j/th, while the Whatsminer M60S+ is 17j/th. Proto Rig’s 14 j/th falls short of being ‘top of the line’.

Yet, similar first runs of new miners from other manufacturers have followed this pattern. For example, the first Auradine miners were about 15% less efficient than the top of the market, but the next version was very competitive.

Proto’s USP lies in its promise of long-term cost savings for mining companies. Added to this, Block is creating not just a better miner, but an entire ecosystem to improve the decentralization of component production within the mining industry on an open-source platform.

Let’s verify Proto’s claim that ‘this time, it’s different’.

Long-lasting Hardware

Replacing and upgrading hashboards is something I’m regularly asked about.

I can’t believe it’s taken this long for a manufacturer to listen to the market, but Proto has finally developed a solution to swap in new, more efficient ASIC hashboards into an existing shell to upgrade efficiency throughout the lifespan of the machine.

We’ve been able to upgrade the RAM and graphics cards in our computers for decades. This goes to show that the bitcoin mining industry is still in its infancy.
The move towards 10-year life cycles (rather than 3-5 years) has three main benefits:

Cost savings
Replacement of parts vs complete units is estimated to save 15-20% over the path of 10 years.
Low time-preference thinking
10-year machines could help investors make longer-term commitments to mining operations.
Sustainability
Fewer machines in the scrap heap would reduce the kinds of hit pieces that plague the electric car battery and photovoltaic panel industries.

Rather than miners dumping machines after their lifecycle, I foresee them putting money and effort into upgrading them with the times.

These rigs will be seen as a fixed piece of a data center rather than a replaceable and temporary computer to be swapped out frequently in favor of the latest and greatest.

Optimized for Infrastructure

Block’s Proto Rig fits three miners’ worth of power into the space of two legacy units.

In order to win market share quickly, they have clearly considered the needs of larger facilities, which, until now, have had to build data centers around the ever-changing sizes and specs of mining hardware.

Apple products change their plugs every few years, and mining manufacturers are no different. Something as simple as knowing what connection type and form factor will be used for the next 10 years has major cost implications per facility.

In our pilot site over the last three years, we’ve spent well over six figures doing basic rack and plug upgrades to meet the changing needs of miners. Every piece of infrastructure that lasts more than a Bitcoin market cycle saves massively on costs.

Designing for infrastructure continuity means facilities can return capital more efficiently.

Speaking from years in real estate, when owners need to ‘keep up with the times’ and remodel every time the tenant turns over in order to meet market conditions, it eats into returns. Now, Proto is addressing that weakness.

While the rigs seem optimized for facilities, not garages, Proto has clearly taken the user experience into account when it comes to troubleshooting and swaps, leading me to believe that the home and small miner market is another stop on the company’s roadmap.

Simple Repairs

Technician minutes are costly, especially when maintaining large-scale facilities. Diagnosing, unpacking and re-racking, and transporting rigs off-site all cost time.

Even fifteen-minute fixes cause a mountain of backlogged maintenance items when you’re talking about thousands of machines. The Proto Rig allows for quick access to fans, power supplies, and other components that may need replacing.

Many sites are often in remote locations, so labor pools aren’t particularly deep. Quick repairs in the rack can be the difference between needing an additional full-time hire at each site or not, and it reduces the need for integrated on-site repair facilities.

Efficiency is everything when the margins matter to clients so much. One detail that caught my eye is that the 3-rig form factor makes each unit over 100 pounds.

Carrying heavy computers many times per day already causes occasional injuries. Most bitcoin mining techs are not bodybuilders!

When planning for miners that are two to three times the weight of current equipment, site managers will need to make adjustments to ensure the health and safety of employees while servicing machines.

While Block claims rigs can be repaired directly on the rack with minimal tooling, it remains to be seen how often machines will need to be serviced by racking and de-racking.

Decentralized Mining

Block’s mission is not just motivated by profit. Securing the network requires all stages of the mining process to be open and competitive.

“If we want Bitcoin to succeed, we need to remove single points of failure and centralizing efforts. The mining hardware is one of those.”

Jack Dorsey, Hosting Bitcoin Podcast, January 2025

Whether Proto gains market share and effectively decentralizes hardware manufacturing depends on the cost.

The new rig is not the most efficient miner on the market, but first runs from other new miner manufacturers have also been midrange on the upper band of the spectrum.

While this could improve quickly, Proto may not be able to command an ultra-premium price right off the bat. In terms of design philosophy, they clearly solve a lot of problems, but ultimately, in the mining game, it is still the most efficient, either with energy or capital, or both, that wins.

However, the ability to swap in new hashboards without having the entire chassis obsoleted by the next version means early adopters won’t be punished by quick gains across versions, giving more people the incentive to give the first run a try.

This is the newsworthy aspect about the Proto launch in my opinion, as the ASIC market lacks competition. Dominant manufacturers like Bitmain and MicroBT have complete pricing power and are able to squeeze profits from even the largest mining hosts.

If a large company with strong supply chains can rein in pricing across the ASIC market, it could mean an economic renaissance for the miners themselves, leading to more investment and hashrate decentralization.

Currently, miners are priced like commodities and based on how much they earn at the maximum. With competition over market share, these companies may be forced to price miners in a way that actually puts the consumer ahead.

Bringing a meaningful share of hashrate production outside of China also removes one of the only remaining single points of failure for hashrate decentralization, as the majority of hashrate is still manufactured in China today.

This is also the first example of an open standard, in which other companies could make a hashboard to fit rigs through Proto’s open source Mining Development Kit.

Superior machines are positive, but a competitive ecosystem is the real long-term winner that makes the network stronger and customer experience better.

Dominant companies have historically built not just the most competitive products, but also the ecosystems that allow other hyper-specialized companies to make the entire experience better for the end user, accreting value on the platform that allows for this kind of development access.

Think of the App Store from Apple. Apple didn’t develop all the software in the App Store, but every app launched in the store makes owning an iPhone potentially more valuable.

Is there a danger that Proto gains a monopoly on the market? This is possible, but unlikely.

If they make their entire platform open for other developers and hardware producers, they lower the barrier to entry for other component manufacturers to create a Cambrian explosion of development and redundancy on products in the mining space.

We need more proof and time to see how Proto can impact small-scale implementation to further decentralize mining.

It’s likely to make the biggest impact in the industrial-scale mining operations, though if all it does is to reduce dependency on a single supplier, it will have made meaningful progress on that mission.

A New Paradigm?

Block is many times larger than the biggest companies in bitcoin mining, meaning they have an advantage in their ability to invest upfront and build market share without needing to immediately turn profits.

If they were new and venture-funded, I would be more skeptical, but they have the moat and commitment to invest in the space and delay gratification after gaining market share. This way, they create a captive ecosystem that accrues more value than the other competitors in the space.

Will we be calling other hardware ‘legacy miners’ anytime soon? This remains to be seen.

Proto’s form factor, power consumption, and design philosophy make it appealing to the infrastructure owner. If Block keeps its promises, hosts like us will love Proto Rigs, consumers will beg for them, and their share of a currently lopsided and barely competitive market will grow.

I never like to get my hopes too high for the first run of any miner, as I and many others have been burned by overcommitting to the first batch of new releases, but this time may be different.

This project has been in the works now for years, and Block wouldn’t let it see the light of day until it was ready to take the mining world by storm.

The company has more robust supply chains than any startup, although without market testing, we don’t know if they will be able to fill demand quickly enough.

Demand, of course, depends on the price. I believe that with their Silicon Valley credentials and history, Block is well equipped to come out on top in this particular picks-and-shovels play on the bitcoin mining industry.

If they succeed, one more risk factor keeping Bitcoin from being truly decentralized at every level is removed, giving us faith in the continued future of a healthy network.

This would be a paradigm shift, and it could help remove some of the stigma and unfavorable policy around bitcoin mining. In the coming years, having such a large publicly-traded player in the vying for the success of the industry at home could secure a great advantage for the U.S.

Dorsey and the Proto team’s philosophy of customer first, longevity, and decentralization is a game-changer. Their ability to adapt quickly and prove economic advantages is what will decide how quickly this revolution takes place.

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