By the time 2036 rolls around, the world of Bitcoin mining will be virtually unrecognizable from what it looked like just five years prior—let alone a decade. The archetype of Bitcoin miners that defined the scene in the early-to-mid 2020s has completely faded away. Back then, these largely public corporations sought massive quantities of low-cost electricity, primarily in developed nations, hoping to scale and monetize these operations for profit. These entities neither produced their own power nor typically engineered or fabricated their ASIC hardware. Instead, they hunted for favorable electricity rates from utility providers, secured tracts of land situated near substation infrastructure, and carefully timed their ASIC procurement to secure the shortest feasible return on investment.
Already by mid-decade, the diminishing profit margins had put considerable strain on this entire business model. Then came the surge in artificial intelligence and high-performance computing (AI/HPC) data centers, which introduced a far more lucrative avenue for grid-connected power. As a result, the once-accessible electricity that public mining operations had relied upon essentially dried up. Many mining firms simply tweaked their existing business model to fit the booming demand for AI/HPC infrastructure. The transition wasn’t complex, and those public companies that managed to pivot efficiently were lauded by shareholders; those that failed to enter the traditional data center space faced condemnation and consequences.
As the age of publicly traded Bitcoin mining companies came to a close, national governments began to recognize the benefits Bitcoin mining could bring to expanding and better managing their electricity grids. In many cases, the rapid expansion of power generation far outstripped the capacity needed to transmit electricity across broader networks, leaving isolated pockets of generated electricity stranded and unable to be delivered where needed. Several countries enjoyed energy surpluses during off-peak periods but experienced shortfalls during morning and evening peaks. Plenty of grids across the Global South lacked either a buyer or the high-capacity transmission infrastructure required to export surplus energy on day-ahead electricity markets.
A critical insight began to crystallize: mining Bitcoin with surplus electricity was essentially the same as exporting power through the internet entirely bypassing the need for expensive cross-border transmission systems. Governments began modeling their Bitcoin mining arrangements on established mineral extraction deals. In such frameworks, a joint venture or special purpose entity was created between a foreign mining company and the state. The mining company would handle extraction, while the government received a royalty—usually a fixed percentage of profits—because the resource in question belonged to the nation.
Sovereign Bitcoin mining agreements followed this template closely. Surplus electricity became viewed as a national treasure, much like minerals buried beneath the ground—with one vital difference tied to time itself. Every hour that excess electricity went unmonetized, it became unproductive, subtly influencing the economics of the power plant that generated it. If those hours accumulated into days, months, or even years, the financial condition of predominantly state-owned energy utilities began to erode. As more countries observed pioneering nations such as Bhutan executing sovereign-level mining deals, they recognized that inaction was unaffordable, and they followed suit.
During the late 2020s, the United States and China engaged in an economic tug-of-war via their respective digital currencies. The U.S. leveraged stablecoins to propagate the dollar globally, while China provided cheap debt-denominated in the Renminbi and offered swap lines to nations adopting the Digital Yuan, their central bank digital currency issued directly by the Bank of China. So-called “middle powers”—nations with dynamic economies capable of influencing their region, yet not quite at superpower level—sought to disentangle themselves from the binary U.S.-China economic conflict. For many countries, Bitcoin presented itself as a viable escape route.
Consider the Strategic Bitcoin Reserve (SBR) legislative proposal enacted in Brazil around 2026. Beyond legally empowering the nation to allocate up to 5% of its foreign reserves into Bitcoin, it eliminated capital gains tax on Bitcoin holdings and permitted the settling of tax obligations using the cryptocurrency. Numerous middle powers adopted comparable measures. By aligning themselves—at either a state or citizen level—with a politically neutral reserve asset that answered to neither Washington nor Beijing, these nations sidestepped the dilemma of having to commit to one financial system at the expense of the other.
For nations that embraced this approach and possessed any meaningful degree of energy self-sufficiency, Bitcoin mining emerged as the most affordable method of accumulating the asset. Some electricity that had previously been exported to neighboring countries was instead redirected toward mining operations. Renewable energy projects that had once been considered unprofitable due to the absence of nearby customers or transmission lines now became priority developments. These projects quickly became badges of national pride, simultaneously boosting the country’s energy portfolio and reinforcing its economic sovereignty.
Instances of this trend surfaced across every continent. Russia was an early forerunner, transforming isolated power production in Siberia into sanctions-resistant assets amid the conflict with Ukraine. Turkey curtailed certain electricity exports to nations like Bulgaria and Iraq and further developed hydroelectric capacity in its eastern regions. Brazil and India each exploited their prolific hydroelectric potential in the Amazon and Himalayas respectively, both far removed from major coastal population hubs. Indonesia and Malaysia finally found practical applications for the enormous geothermal energy resources on the island of Borneo. Ethiopia shifted power sales toward Bitcoin mining as a matter of state policy, negotiating profit-sharing arrangements between miners and the country’s sovereign wealth fund.
These government-led Bitcoin mining programs served as testing grounds for improving grid management strategies using curtailable electrical loads and reserve capacity. Pundits spent years debating whether battery energy storage systems (BESS) or Bitcoin mining represented the superior solution for dispatchable demand. In reality, the most effective answer turned out to be deploying both, owing to their unique and complementary characteristics. Bitcoin mining can handle large-scale absorption or shedding of electrical load over extended durations, while batteries deliver precision within milliseconds yet lack the capacity for long-term load management due to finite storage limits and cycle life constraints.
The dual gains of economic resilience and improved grid stability that nations derived through Bitcoin mining began to breed jealousy among neighboring countries. Over roughly five years, sovereign-level Bitcoin mining projects transformed from being perceived as risky experiments into strategic imperatives. Even nations saddled with relatively high electricity costs came out ahead by incorporating Bitcoin mining operations, which proved more cost-effective than attempting to manage the inherent variability of renewable energy alone through BESS. Even older-generation ASICs commanded a substantial premium for a period as a sudden surge of FOMO-driven demand took hold. Before long, it was the absence of a Bitcoin mining initiative in an energy ministry’s portfolio that stood out, rather than its presence.
Now, as 2036 unfolds, the next Bitcoin halving is set to occur later this year, slashing the block reward to 0.39 Bitcoin per block. Fortunately, Bitcoin’s extraordinary ascent in stature and value as a global macro asset—exceeding even gold’s market capitalization—prompted nations to adopt the digital asset as a neutral reserve asset in cross-border trade among varying economic and currency blocs. This phenomenon steered a heavier flow of large-scale value transfers toward the base layer of the Bitcoin blockchain, attracted by its immutability, which consequently propelled fee-based revenues to the point where they ultimately surpassed
The issuance of block rewards has plateaued, yet mining profitability has kept shrinking due to worldwide state-level adoption and the emergence of geopolitical rivalries.
Bitcoin pioneers mourn the industry’s capture by sovereign entities, but from a game-theory standpoint, this outcome was unavoidable. As Bitcoin became embedded in the foundations of global finance, producing the asset turned into a matter of national interest. No private enterprise could match governments in terms of scale, coordination, or control over energy resources. In essence, the sole method to prevent state dominance in Bitcoin mining would have been for the network to stop growing before reaching the status of the world’s primary neutral reserve asset. Had that occurred, mining would have stayed in private hands, but the network would never have evolved beyond a niche alternative asset.
This does not imply that governments run the entire mining sector. Public-private partnerships form the core of the industry, mirroring the energy landscape of a decade ago. Just as oil and gas companies are private ventures that depend heavily on government-licensed reserves, independent power producers build generation capacity to sell electricity for profit, yet they must navigate regulatory frameworks and sell to utilities that are, at minimum, under state supervision if not directly owned by it. Bitcoin mining has gradually shifted toward a similar model, where private companies construct and manage data centers, but almost always under government-approved agreements.
The most lucrative players in this ecosystem are the firms that design and manufacture ASICs. These companies are highly specialized and subject to export controls, reminiscent of how semiconductor firms were restricted during the early 2020s AI surge. Such corporations are headquartered in either the U.S., China, or nations closely aligned with one of these powers. Other countries simply could not keep pace with the chip design innovations and technological spillovers generated by the defense technology competition between the two superpowers.
Because mining efficiency confers a national edge, the development of machines that deliver this advantage has been partly financed by state grants and propelled by classified technological insights. In return for such support, governments regulate or prohibit foreign sales through legislation resembling the International Traffic in Arms Regulations (ITAR) or the CHIPS Act. For countries lacking the capability to design and manufacture their own advanced ASICs, gaining access to state-of-the-art mining hardware becomes a bargaining chip in trade negotiations, much like access to NVIDIA chips was during the AI boom.
Although early cypherpunks would recoil at the involvement of nation-states in Bitcoin mining, paradoxically the network’s decentralization remains as robust as ever. The widespread distribution of hash power ensures that no single entity could ever compromise the network. Moreover, any threat posed by one nation would swiftly override other disputes and temporarily rally the rest of the world against that country as a rogue actor endangering the global financial system. While many nations still anchor their economies to fiat currencies, every country on the planet recognizes Bitcoin’s value, enabling individuals to adopt a Bitcoin standard in every region of the world. If Satoshi had to choose between the decentralization of money and the proof-of-work algorithm, he would likely have prioritized the former. Let us hope that was indeed his preference, because that is precisely what transpired.
This article appears in the latest Print edition of Bitcoin Magazine, The 2036 Issue. We are presenting it here as an early preview of the themes examined throughout the complete issue.
