Square Flies the Flag for the Lightning Network With 9.7% Yield on Bitcoin Holdings

Block’s Square is generating a 9.7% annual yield on its Bitcoin holdings by operating a Lightning Network node, a significant development highlighted at Bitcoin 2025. Miles Suter, Block’s Bitcoin product lead, revealed that this substantial return—estimated at approximately $1 million annually by Lightning Labs’ Ryan Gentry—stems from efficiently routing payments via Square’s Lightning service provider, c= (created two years ago). This innovative approach leverages the Lightning Network’s capacity for micropayments to bypass the main Bitcoin blockchain’s limitations in speed and scalability.

While the Lightning Network initially promised to resolve Bitcoin’s scaling issues, challenges remain, primarily the need for inbound liquidity. This necessitates users committing Bitcoin to receive payments, potentially hindering smaller node participation and overall decentralization. Despite these drawbacks, Square views the Lightning Network as crucial for expanding Bitcoin’s payment adoption. Currently, 25% of Square’s outbound Bitcoin payments utilize Lightning, and the company is actively testing Lightning-based payments at Bitcoin 2025, with a planned rollout to all eligible Square sellers in 2026.

Suter emphasized the network’s strengthening through facilitating faster, more convenient payments. He underscored Bitcoin’s evolution beyond a mere asset, describing it as both an asset and a protocol, while highlighting Block’s initiative to establish it as a leading global payment system. This strategy involves actively utilizing the Lightning Network to enhance transaction efficiency and user experience. The success of this approach demonstrates a practical application of the Lightning Network, offering a compelling counterpoint to previous concerns about its scalability and accessibility. The significant yield generated by Square’s operations underscores the potential financial incentives driving broader adoption and development of Bitcoin’s layer-2 solutions.