It seems that institutional investors are shifting from merely purchasing BTC to investing in Bitcoin mining.
This is what the CEO of GoMining, Mark Zalan, recently stated during an interview.
Zalan is obviously not an impartial source in this field, given that GoMining is indeed a company engaged in mining, but at least he is well-informed on the facts, as well as a true insider.
Therefore, his statements cannot be considered unbiased, but they cannot be ignored either.
Bitcoin Mining
The key point is that some financial institutions are considering financing and owning the underlying infrastructure that powers Bitcoin, to the extent of envisioning the transformation of mining operations into a new asset class potentially generating returns.
It should be noted that Bitcoin mining is now an activity completely dominated by large corporate players, as it requires making significant investments and incurring substantial expenses. In short, it has evolved into a capital-intensive industry, capable of attracting hedge funds, private equity firms, and energy companies.
Additionally, it allows for exposure to Bitcoin while avoiding the volatility of the price of BTC.
GoMining
The company led by Zalan manages mining facilities while also providing users access to the computing power used to validate Bitcoin transactions.
In fact, in 2021, it launched its own platform for retail users, which does not require users to actually mine, but only to participate in mining with a financial exposure (the so-called “cloud mining“).
As of today, it claims to have over 4.5 million registered users and more than 10 million terahash of active hashrate.
It is therefore a company that targets the general public, with the aim of making mining accessible to both retail and institutional investors.
In fact, in addition to the retail offering, it also provides larger investors with structured investment vehicles and mining-backed funds.
It is therefore possible that Zalan’s statements are a promotional initiative to market the company’s services.
Zalan’s Statements
During the interview, Zalan stated that engaging in mining can outperform the returns of merely holding BTC.
It argues that miners continue to earn even during periods of price stagnation, with a steady yield and partial hedging against market volatility.
In this regard, it is important to specify that the hashrate of Bitcoin mining has been steadily increasing for many years now, so to continue earning from mining, it is also necessary to keep investing (which is not required for merely holding BTC).
Moreover, the hedge against volatility is only partial, because in reality, with mining, BTC are earned, which then need to be sold to cover the operational costs in fiat currency.
According to Zalan, the next phase of growth in the sector is particularly driven by tokenized hashrate, which is a process that converts computing power into digital tokens representing fractional ownership of the same computing power.
This also seems like a propaganda statement.
Institutional Investors Target Bitcoin Mining Companies
In the Bitcoin mining sector, institutional investors might be attracted by potentially higher returns compared to merely holding BTC.
According to Zalan, it would be an investment similar to those in data centers, which indeed have been yielding significantly in recent years.
However, there would also be another interesting aspect for institutional investors.
In fact, Bitcoin mining is a highly energy-intensive activity, and therefore potentially polluting if conducted with electricity generated from non-renewable sources.
For this reason, in this sector, there are operators increasingly seeking to position themselves as flexible energy consumers who can stabilize electrical grids, precisely to also promote the production of electricity from renewable sources.
Since mining operations can reduce or halt their electricity consumption during peak demand periods, as well as absorb excess electricity produced from renewable sources during off-peak hours, according to Zalan, they help utilities manage fluctuations in energy supply.
In this way, miners can not only support the integration of renewables but also become potential partners for energy producers.
Additionally, it was stated that GoMining anticipates increasing institutional participation in Bitcoin mining through dedicated funds that invest in specific operations and infrastructure.
