With Eric Benoist, Tech and Data Research Specialist, and Rita Boutros, Tech and Data Research, we explore how the ‘unseen’ digital industry is reinventing itself as it sits at the crossroads of technology, energy and geopolitics.

Behind every Bitcoin transaction lies a vast “invisible” network of computers racing to solve puzzles. This process is known as mining – and it secures the entire Bitcoin ecosystem, allowing it to function without banks or middlemen.

Today, Bitcoin miners are often viewed as guardians of the decentralized monetary network. Maintaining the trustless system that allows the exchange of value online, without central oversight.

But the golden age of mining is over, and the mining world is facing its toughest challenge yet; shrinking rewards and rising costs are forcing operators to reinvent or retreat.

To understand why mining matters, its helps to first understand what secures it: the blockchain.

Blockchain is a shared database that records transactions across a network of computers. Once a transaction is stored in the database, it cannot be altered. Each block of data is linked to the block before it, creating a chain that is transparent, verifiable, and nearly impossible to tamper with. And because the blockchain is distributed, everyone in the network has the same copy of the record. If one computer tries to cheat, the rest reject it. This makes the system immutable and decentralized, meaning no single party can control it.

Mining keeps this process honest. Through a protocol called Proof of Work, miners compete to solve mathematical puzzles. The winner adds the next block in the chain and earns a reward in newly created Bitcoin(s). This is fundamental to keeping operations secure and decentralized as it encourages fair participation.

Mining today has become a high-stakes balancing act between efficiency and cost. Perhaps the biggest challenge is Bitcoin’s built-in halving mechanism, which sees block “rewards” cut in half every 4 years. This event decreases the rate at which new Bitcoins enter circulation and compresses miner income overnight. For example, what was a reward of 6.25 Bitcoins per block became 3.125 Bitcoins per block on the last halving event in April 2024.

In theory, long-term Bitcoin appreciation should compensate these cuts, but energy prices, hardware costs and even network competition often squeeze profits.  Thus, even when Bitcoin is up, there can still be sustained pressure on earnings.

Meanwhile, another challenge comes from network difficulty – a self-adjusting feature that ensures blocks are created roughly every ten minutes, no matter how many miners join the race. Meaning it’s getting harder and harder for miners to earn rewards.

As a result, only the most efficient well-capitalised operators can survive.

To stay afloat, Miners are experimenting with new strategies, and reinvention is already well under way. Some are fine tuning energy management to ensure absolute efficiency, others are turning to custom software to cut costs. But the biggest shift comes from miners repurposing their infrastructure for artificial intelligence (AI) and High-Performance Computing (HPC) – industries that require vast amounts of energy and computing power, something which miners poses in abundance.

This is somewhat of a natural evolution, as the data centers once built for Bitcoin are well-suited to power-hungry AI workloads and so can offer steady contracted revenues instead of volatile crypto-driven income. That said, it’s not an easy pivot. Bitcoin facilities are optimized for simple, repetitive tasks, while AI requires advanced networking and cooling.

For miners that remain focused on Bitcoin itself, the next frontier is financial innovation. Derivative tools, like hashrate forwards, allow miners to hedge against volatile market conditions. Such contracts can stabilise revenue and manage short-term cash flow, turning what was once a high-risk business into a more structured, strategic operation.

The energy use for Bitcoin mining has long been a source of criticism. Detractors call miners “greedy opportunists” who consume “vast amounts of electricity in pursuit of speculative profits”, regardless of the impact – societal or environmental. But the reality is more nuanced.

Mining farms are flexible consumers of power – they can shut down or restart almost instantly. That makes them valuable partners for renewable grids, which need adaptable demand to balance fluctuating supply. The sector’s flexible energy demand, geographic mobility, and growing symbiosis with renewable and stranded power make it an underappreciated asset within modern electricity grids.

Some miners already run on surplus hydropower or capture flare gas that would otherwise be wasted. Others repurpose their waste heat to warm greenhouses and buildings. In this way, mining can support rather than compete with the energy transition.

Beyond the environmental debate, there’s also a geopolitical layer. Where Bitcoin mining happens, and who controls it, matters. Control over hash rate is increasingly viewed through the “prism of national resilience”. If most mining were concentrated in a single country, that nation could, in theory, influence how the global network functions.

Thus, keeping mining geographically diverse is a matter of strategic autonomy and technological sovereignty. In plain terms, it’s about ensuring no single state dominates the backbone of a decentralised financial system.

The future of mining remains uncertain. On one hand, the industry faces relentless economic and environmental pressures. On the other, it is evolving in fascinating ways, merging with renewable energy, advanced computing, and even national strategy.

To view mining solely through the lens of short-term return on investment is to overlook its broader significance. It’s not just about creating Bitcoins. It’s about maintaining a decentralised network, supporting modern energy systems, and preserving digital sovereignty.

The miners who adapt – whether by partnering with renewables, integrating AI, or strengthening national infrastructure – are redefining what it means to extract value in the digital age.

For all the controversy it attracts, Bitcoin mining may prove to be one of the most unexpected and consequential industries of the 21st century.

With Eric Benoist, Tech and Data Research Specialist, and Rita Boutros, Tech and Data Research, we explore how the ‘unseen’ digital industry is reinventing itself as it sits at the crossroads of technology, energy and geopolitics.

Behind every Bitcoin transaction lies a vast “invisible” network of computers racing to solve puzzles. This process is known as mining – and it secures the entire Bitcoin ecosystem, allowing it to function without banks or middlemen.

Today, Bitcoin miners are often viewed as guardians of the decentralized monetary network. Maintaining the trustless system that allows the exchange of value online, without central oversight.

But the golden age of mining is over, and the mining world is facing its toughest challenge yet; shrinking rewards and rising costs are forcing operators to reinvent or retreat.

To understand why mining matters, its helps to first understand what secures it: the blockchain.

Blockchain is a shared database that records transactions across a network of computers. Once a transaction is stored in the database, it cannot be altered. Each block of data is linked to the block before it, creating a chain that is transparent, verifiable, and nearly impossible to tamper with. And because the blockchain is distributed, everyone in the network has the same copy of the record. If one computer tries to cheat, the rest reject it. This makes the system immutable and decentralized, meaning no single party can control it.

Mining keeps this process honest. Through a protocol called Proof of Work, miners compete to solve mathematical puzzles. The winner adds the next block in the chain and earns a reward in newly created Bitcoin(s). This is fundamental to keeping operations secure and decentralized as it encourages fair participation.

Mining today has become a high-stakes balancing act between efficiency and cost. Perhaps the biggest challenge is Bitcoin’s built-in halving mechanism, which sees block “rewards” cut in half every 4 years. This event decreases the rate at which new Bitcoins enter circulation and compresses miner income overnight. For example, what was a reward of 6.25 Bitcoins per block became 3.125 Bitcoins per block on the last halving event in April 2024.

In theory, long-term Bitcoin appreciation should compensate these cuts, but energy prices, hardware costs and even network competition often squeeze profits.  Thus, even when Bitcoin is up, there can still be sustained pressure on earnings.

Meanwhile, another challenge comes from network difficulty – a self-adjusting feature that ensures blocks are created roughly every ten minutes, no matter how many miners join the race. Meaning it’s getting harder and harder for miners to earn rewards.

As a result, only the most efficient well-capitalised operators can survive.

To stay afloat, Miners are experimenting with new strategies, and reinvention is already well under way. Some are fine tuning energy management to ensure absolute efficiency, others are turning to custom software to cut costs. But the biggest shift comes from miners repurposing their infrastructure for artificial intelligence (AI) and High-Performance Computing (HPC) – industries that require vast amounts of energy and computing power, something which miners poses in abundance.

This is somewhat of a natural evolution, as the data centers once built for Bitcoin are well-suited to power-hungry AI workloads and so can offer steady contracted revenues instead of volatile crypto-driven income. That said, it’s not an easy pivot. Bitcoin facilities are optimized for simple, repetitive tasks, while AI requires advanced networking and cooling.

For miners that remain focused on Bitcoin itself, the next frontier is financial innovation. Derivative tools, like hashrate forwards, allow miners to hedge against volatile market conditions. Such contracts can stabilise revenue and manage short-term cash flow, turning what was once a high-risk business into a more structured, strategic operation.

The energy use for Bitcoin mining has long been a source of criticism. Detractors call miners “greedy opportunists” who consume “vast amounts of electricity in pursuit of speculative profits”, regardless of the impact – societal or environmental. But the reality is more nuanced.

Mining farms are flexible consumers of power – they can shut down or restart almost instantly. That makes them valuable partners for renewable grids, which need adaptable demand to balance fluctuating supply. The sector’s flexible energy demand, geographic mobility, and growing symbiosis with renewable and stranded power make it an underappreciated asset within modern electricity grids.

Some miners already run on surplus hydropower or capture flare gas that would otherwise be wasted. Others repurpose their waste heat to warm greenhouses and buildings. In this way, mining can support rather than compete with the energy transition.

Beyond the environmental debate, there’s also a geopolitical layer. Where Bitcoin mining happens, and who controls it, matters. Control over hash rate is increasingly viewed through the “prism of national resilience”. If most mining were concentrated in a single country, that nation could, in theory, influence how the global network functions.

Thus, keeping mining geographically diverse is a matter of strategic autonomy and technological sovereignty. In plain terms, it’s about ensuring no single state dominates the backbone of a decentralised financial system.

The future of mining remains uncertain. On one hand, the industry faces relentless economic and environmental pressures. On the other, it is evolving in fascinating ways, merging with renewable energy, advanced computing, and even national strategy.

To view mining solely through the lens of short-term return on investment is to overlook its broader significance. It’s not just about creating Bitcoins. It’s about maintaining a decentralised network, supporting modern energy systems, and preserving digital sovereignty.

The miners who adapt – whether by partnering with renewables, integrating AI, or strengthening national infrastructure – are redefining what it means to extract value in the digital age.

For all the controversy it attracts, Bitcoin mining may prove to be one of the most unexpected and consequential industries of the 21st century.