Written by Øyvind Sjaastad

November has been a pivotal month for the bitcoin mining industry. The big story is how the regulatory landscape has shifted in a more positive direction, indicating that the mining industry stands in front of a new dawn of increased acceptance among government officials. We’ve also seen a prominent state-owned company entering the mining space and the leading public miner has accelerate its bitcoin accumulation efforts by tapping into the capital markets.

As always, our monthly review of what has happened on the bitcoin mining scene last month delves into the implications of three of the most important developments that took place. Let’s dive in.

November marked a pivotal month for the bitcoin mining industry. We’ve seen governments around the world demonstrating a more favorable stance toward both Bitcoin and the Bitcoin mining industry. Coupled with a surging bitcoin price, this shift has fostered growing optimism among miners who are now less burdened by the constant concern of looming punitive regulatory actions.

In Switzerland, lawmakers in Bern—a region akin to a U.S. state—have directed the Executive Council to prepare a detailed report evaluating the externalities of Bitcoin mining. The report focuses on three key objectives: identifying areas within Bern with surplus energy, examining how bitcoin mining can utilize this unused energy in collaboration with Swiss companies, and assessing its potential to stabilize electricity grids. This initiative signals a growing interest in positioning Bern as a forward-thinking hub within the evolving financial and energy landscapes.

Historically, the Bitcoin mining industry has faced criticism from government officials worldwide for its energy-intensive nature. Meanwhile, miners’ positive contributions as a location agnostic, flexible load has often been overlooked. This report shows signs that attitudes towards mining may be shifting, as governments increasingly recognize how Bitcoin mining can be a force for good. Should the findings conclude that Bitcoin mining positively impacts both the national power grid and environmental conditions positively, the likelihood of favorable regulation emerging in Switzerland will increase significantly.

As more jurisdictions adopt supportive stances toward Bitcoin mining, a domino effect could unfold as other governments are encouraged to follow suit. This momentum would likely gain strength as officials recognize that local Bitcoin mining operations not only promote renewable energy development but also attract investments, create jobs and generate tax revenue.

Meanwile, in the United States, Bitcoin miners are also experiencing relief following the recent Republican sweep in the 2024 elections. Earlier this year, the Biden administration proposed a 30% tax on all Bitcoin mining activity, which introduced significant uncertainty for miners, threatening to render most U.S.-based mining operations unprofitable and, if passed, would effectively force them to move elsewhere. With the Republicans now controlling the presidency, Senate, and the House of Representatives, the outlook for miners has dramatically shifted in a positive direction. President-elect Donald Trump has pledged to bring regulatory clarity to the cryptocurrency industry, establish a strategic national Bitcoin reserve, and ensure that “Bitcoins are made in the USA.” At the state level, Pennsylvania is leading a movement to pass legislation allowing states to build their own Bitcoin reserves, and more states are roumored to follow suit. This shift in policy makes the prospect of punitive regulation against Bitcoin mining in the largest global mining hub far less likely.

Together, these regulatory developments set the stage for the bitcoin mining industry in the Unites States to continue to flourish, and could make Switzerland a new potential attractive location. We expect more positive regulatory developments in the coming months as lawmakers continue to open their eyes towards the positive impact bitcoin mining activity can have on their nation.

A new large state-owned company is exploring the opportunities Bitcoin mining brings to the table. In November, Deutsche Telekom, Europe’s largest telecommunications provider, recently announced a new Bitcoin mining pilot project called Digital Monetary Photosynthesis. The goal of the project is to evaluate how bitcoin mining can contribute to solving the problems of grid balancing and utilization of excess renewable power.

Bitcoin mining has already been validated that bitcoin are good at solving the problems Deutsche Telekon is exploring. In Texas, mining activity has undeniably made it possible to monetize excess renewable energy, which is possible because miners represent a location-agnostic, flexible load that can place set up anywhere to consume renewable electricity oversupply, scooping up the excess electricity and using it to mine bitcoin. In short, miners as a buyer of last resort that improves the economics of renewable projects by increasing the demand for electricity.

Bitcoin miners are also an interruptible form of load that can curtail their electricity demand at a moments notice, which makes them a perfect demand response tool that can help grid operators balance supply and demand. Together, these opportunities makes bitcoin miners a valuable tool for grid operators, as Germany soon will find out.

Overall, it is clear that the narrative around bitcoin mining is shifting in a positive direction. Whereas discussions about bitcoin mining among traditional market participants in the past tended to focus on the industry’s energy intensive nature, a more nuanced and constructive debate seems to be taking place, giving mining a fair shot at proving its positive sides.

Stacking Sats has become the mantra for an increasingly large group of investors. From private-and public companies to retail- and professional investors, we’ve seen more and more people trying to accumulate as much bitcoin as possible.

Marathon is leading the way among public bitcoin mining companies. The mining giant acquired 6,474 bitcoins in November funded by the completion of a $1 billion convertible senior note offering, taking its total bitcoin holdings up to 32,794. Thus, Marathon is not only accumulating bitcoin through its mining business, but also by raising capital with the explicit purpose of buying bitcoin. This decision makes the company somewhat of a bitcoin proxy, although much less pure than companies like Microstrategy who have entirely pivoted its business model to being a bitcoin holding company.

Marathon’s bitcoin position accounts for roughly half of the total 69,554 total bitcoins held by public miners. In second place we find Riot with its 10,928 bitcoin position, followed by Hut 8’s 9,110 bitcoins, and Cleansparks 8,701 bitcoins. So far, Marathon is the only miner that has raised capital explicitly to buy bitcoin, while the others are primarily accumulating bitcoin through their mining operations.

Going forward, we believe public miners, with Marathon leading the way, will increasingly seek to build their bitcoin treasuries. This is because it will be challenging for them to resist the potential gains they could harness if they increase their bitcoin exposure with a new bull market looming on the horizon. For this reason, public miners will likely lower their bitcoin production to liquidation ratio in an effort to increase the number of bitcoins on their balance sheet.

However, public miners should approach this strategy with caution. Last cycle, many public mining companies decided to hodl most of their bitcoin production, only to become forced to sell them at low prices when the market turned in order to fund operational expenses. Effectively, they were buying high and selling low — the opposite of what one would want. It ended up asa bloodbath.

Therefore, it is important that miners deploy a treasury management strategy that strikes a balance between capturing upside potential through bitcoin exposure and having enough available liquidity to ensure smooth operations. This can be done by utilizing a hybrid treasury management strategy where they decide to hodl on to parts of their bitcoin production, while selling off the rest.

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