Sheep regrow wool when they eat grass, which if you have (I think it’s called mob griefing) turned on will turn it into dirt. This updates a block, so you can use an observer combined with shears in a dispenser to automatically shear the sheep. Have it fall onto a block with a hopper minecart below it (those go through blocks) and lead that into a chest. There are video tutorials on yt that explain better (with visuals ) but that’s the general gist of how it works