Opinion by: Fakhul Miah, Managing Director of GoMining Institutional
The Attractiveness of Bitcoin Mining for Institutions
The Bitcoin (BTC) mining sector is increasingly appealing to institutional investors. Major fintech companies are not just accumulating Bitcoin; they are actively investing in mining operations, largely due to the supportive regulatory framework in the U.S. and the favorable profit margins associated with BTC.
Assessment of Mining Profitability
Bitcoin mining remains profitable. According to CoinShares, the average cost for U.S. miners to mine one BTC reached $55,950 in Q3 2024. Different models, however, present varying figures, with MacroMicro estimating costs at over $92,000 and Glassnode’s Difficulty Regression Model assessing it at around $34,400 as of February 20, despite BTC’s price reaching $98,300 that day.
Regional Cost Variations
Global mining costs vary significantly by location. For instance, it costs about $321,000 to mine a BTC in Ireland, while in Iran, that figure is slightly over $1,300. Besides electricity, expenses related to hardware, labor, and maintenance contribute to the overall costs faced by miners, particularly in the U.S., where operational challenges are mounting.
Boosting Economic Viability
In addition to block rewards, miners also earn from transaction fees, which depend on network activity. Daily transaction fees fluctuated between $360,000 and $1.3 million recently, averaging around $595,000. This additional revenue stream enhances the economic viability of Bitcoin mining and diversifies its income, making it more resilient.
Institutional Interest in Mining
The attractive revenue prospects in Bitcoin mining are capturing significant institutional interest. In 2024, U.S. mining pools accounted for over 40% of the global Bitcoin network’s hashrate. A study by EY-Parthenon and Coinbase indicated that 83% of 352 institutions plan to increase crypto allocations, with many considering investments in mining companies.
Future Outlook and Institutional Momentum
Recent favorable sentiment and policies under the Trump administration have invigorated optimism within the crypto space. Bitcoin mining is becoming a critical economic contributor, with the sector generating approximately $4.1 billion and creating over 31,000 jobs in the U.S. As Bitcoin mining firms pivot to becoming hybrid data processing giants for AI, the U.S. is poised to lead the digital asset sector.
Opinion by: Fakhul Miah, Managing Director of GoMining Institutional.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
