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Bitcoin Mining Industry Attracts Institutional Investors Amid US Regulatory Favorability

Coin WorldSaturday, May 3, 2025 11:16 am ET

2min read

Institutional investors are increasingly drawn to the Bitcoin mining industry, attracted by the favorable regulatory environment in the US and the profitability of Bitcoin (BTC). Fintech giants are not only accumulating Bitcoin but also investing in mining operations, further bolstered by the diversification of computing power towards AI, which enhances their economic viability and investment appeal. The future of the Bitcoin network's foundational layer appears promising, potentially marking a new era of growth.

Bitcoin mining remains profitable, with varying estimates from different models. CoinShares reported that the average cost to mine 1 BTC for US-listed miners was $55,950 in Q3 2024. MacroMicro.me data indicated a higher cost of over $92,000, while Glassnode’s Difficulty Regression Model estimated it at approximately $34,400. These costs vary significantly by region, with Ireland having the highest electricity cost at roughly $321,000 per BTC, compared to just over $1,300 in Iran. Other factors such as hardware, labor, and maintenance also influence mining costs.

Recent data from CoinShares and MacroMicro.me highlights the challenges faced by Bitcoin miners in the US. While some institutional miners remain profitable, the broader landscape shows increasing operational pressures that could reshape the industry. If these challenges are not addressed, highly profitable mining institutions may expand their operations and acquire struggling miners, potentially putting smaller miners at risk.

In addition to block rewards, miners benefit from Bitcoin network transaction fees, which have been averaging $595,000 daily over the past month. This additional revenue stream enhances the economic appeal of Bitcoin mining and strengthens the resilience of the business model by diversifying income sources. Mining hardware is also being used for AI and high-performance computing, allowing mining firms to rent out their hardware for AI tasks, further diversifying their revenue streams.

The growing revenues in the Bitcoin mining industry have attracted significant attention from institutional investors. Bitcoin mining pools in the US accounted for over 40% of the global Bitcoin network’s hashrate in 2024. Research indicates that a majority of global institutions plan to increase their crypto allocations this year, with many considering investments in digital asset companies, including mining companies. This has led to substantial investments in companies like riot platforms and CoreWeave.

The favorable market sentiment has facilitated more initial public offerings (IPOs) and specialized funds targeting mining companies. CoreWeave, for example, aims to go public with a $4-billion IPO to reach a $35-billion valuation. Bgin Blockchain, a crypto miner manufacturer, recently filed to go public in the US, with expectations to raise $50 million for its IPO. This surge in institutional momentum is set to benefit the Bitcoin mining industry by driving up demand and tightening available supply, potentially increasing market scarcity and supporting higher prices.

The optimism around crypto-friendly policies has significantly increased following the US presidential elections in November 2024. The establishment of a Strategic Bitcoin Reserve in early March has triggered positivity in the crypto and mining sectors. Bitcoin mining operations have contributed significantly to the US economy, generating roughly $4.1 billion in gross domestic product and creating over 31,000 jobs nationwide. The industry is also revitalizing rural areas by generating tax revenue and repurposing remote locations for mining operations.

The latest investments, leadership appointments, and IPOs indicate that Bitcoin mining firms have a significant tailwind. They are no longer just about BTC; they are becoming data infrastructure providers for the AI sector, turning into hybrid data processing giants. The US could potentially become the leader in the digital asset and Bitcoin mining space due to the pro-crypto stance of the Trump administration, fulfilling its goal of being the “crypto capital of the world.” As institutions double down on Bitcoin mining and AI convergence, the industry is poised for evolution, with the smartest capital already claiming its share of the modern digital gold rush.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.