Digital Assets
The Nation-State Hash Race: 13 Governments Mining Bitcoin
It’s been seventeen years since Bitcoin (BTC +0.44%) was created in the aftermath of the 2008 financial crisis as a digital currency that operates without a central authority.
During this time, the cryptocurrency has evolved from a fringe, speculative asset to a legitimate investment class, adopted by institutions, family offices, endowment funds, sovereign wealth funds, and now even nations.
Today, several governments hold significant Bitcoin reserves comprising assets seized through law enforcement activities. About 646,685 BTC, or over 3% of Bitcoin’s total supply, is currently held by governments around the world.
However, passive Bitcoin collection is not the only way that nations are accumulating the crypto asset. Governments are also engaging in mining to boost their holdings.
In fact, according to VanEck, at least a dozen national governments are now actively mining Bitcoin. In its Mid-December 2025 Bitcoin ChainCheck, while noting the state of the largest cryptocurrency’s network, the investment firm stated that:
“We believe up to 13 nations are mining with support from their central governments.”
This growing state-sponsored activity highlights a major shift in how sovereign states view the world’s leading cryptocurrency, which has massive implications for Bitcoin’s security and technological sovereignty.
As for which countries are involved in Bitcoin mining, VanEck hasn’t mentioned any names, leaving plenty of room for speculation.
Based on the policies, announcements, and resources, several likely candidates include state-owned companies hosting mining infrastructure, monetizing excess energy, and investing in mining operations. So, let’s examine who these nations could be, whose governments are directly or indirectly supporting mining operations through access to energy, infrastructure, or investment.
El Salvador
One of the most well-documented cases of Bitcoin mining adoption, this Central American country has been engaged in mining operations for about five years.
In 2021, El Salvador made Bitcoin legal tender, which President Nayib Bukele said would help the nation achieve financial sovereignty and inclusion. This followed the public launch of geothermal mining activities at state-owned volcanic power plants. Any Bitcoin mined is added directly to the national reserves, reinforcing the country’s strategy of treating BTC as a strategic monetary asset.
This isn’t just a pilot program but an integrated national policy, which, combined with its market purchases, has helped the country’s reserves surpass 7,565 BTC worth about $500 million, down from the peak of about $800 million in October 2025.
Bhutan
Yet another undisputed name in Bitcoin mining is the Himalayan kingdom, which has been mining Bitcoin for several years using its abundant hydroelectric power.
It’s through the country’s sovereign investment arm, Druk Holding & Investments, that Bhutan has been mining the digital asset using surplus power generated through renewable energy sources, which, combined with cold temperatures and stable governance, make it the perfect candidate for long-term Bitcoin accumulation.
Bhutan, unlike El Salvador, has been operating its mining operations quietly. The nation is expected to rank among the largest sovereign Bitcoin reserves relative to GDP, accumulating more than $1 billion in Bitcoin at its peak. However, the government has been constantly selling its BTC over the past few months, now holding only 5,600 BTC worth $381 million.
Argentina
Before even Bitcoin-friendly President Javier Milei won the elections in late 2023, state-owned energy firm YPF’s renewable energy arm, YPF Luz, had been supplying power to crypto mining companies.
A couple of years ago, it also announced a partnership with Genesis Digital Assets (GDA) to launch a gas flare-powered mining facility, allowing it to monetize the stranded natural gas from oil fields that’s burned as waste.
United Arab Emirates (UAE)
The UAE has a reserve of 6,420 BTC, worth $436 million, making it the 6th-largest nation by Bitcoin holdings.
These reserves are in part funded by government enforcement actions against fraudulent activities. But that’s not all. The country has also been involved in Bitcoin mining for a while. These activities are carried out through entities such as Citadel Mining, which has ties to state-linked companies. The government also has a history of working with Bitcoin mining firms like MARA (formerly Marathon Digital) and Zero Two.
The UAE frames mining as infrastructure on par with data centers and energy projects, though it restricts crypto mining on agricultural land.
Oman
The country has been utilising its natural gas resources to power crypto mining projects.
For this, the government has invested through its sovereign wealth arm, OQ Group, alongside partnerships with Exahertz and Green Data City to run mining operations powered by renewable energy sources, including solar.
A couple of years ago, Oman was running pilot mining operations with around 20 MW of power consumption, while larger-scale projects aiming for 400 MW were under development. The idea has been to use Bitcoin mining to reduce dependence on oil exports while developing advanced computing capabilities.
According to Hashrate Index, Oman has established itself as a mining hub, driven by state-supported initiatives and diversifying energy monetization efforts. Access to low-cost power has helped it rank among the top 10 mining countries.
Iran
Iran may not rank among the largest Bitcoin holders, but its influence is rapidly growing thanks to the regulatory clarity and legal-mining-for-reserves model. The nation’s large natural gas reserves and state-controlled electricity pricing also make it one of the cheapest places to mine Bitcoin.
While cryptocurrency use was banned in 2017, Iran legalized Bitcoin mining at the state level a couple of years later to generate revenue amid sanctions. Since then, it has essentially treated Bitcoin mining as a state-regulated industry. Interested parties can apply for establishment permits and operation permits to start a mining business. However, the government actively supervises operations and routinely enforces shutdowns during energy shortages.
Iran has reportedly been using Bitcoin mining as a sanctions-circumvention tool. TRM Labs noted last year that “Tehran continues to rely on crypto mining as a sanctions-evasion tool and revenue source, even amid market and operational disruption.”
Japan
One of the earliest adopters of Bitcoin, Japan, has also joined the ranks of nations deploying resources and initiatives to mine the cryptocurrency. The government-controlled TEPCO, Japan’s largest power company, has been mining Bitcoin using renewables for a few years now.
These state-backed Bitcoin mining initiatives continue to ramp up, with the government now leveraging excess energy capacity, strategic investment vehicles, and public data centers. Its latest initiative involves collaboration between energy utilities, technology partners, and the Ministry of Economy, Trade and Industry (METI).
Last year, the East Asian country established a project to connect its power grid to specialized mining machines from the Bitcoin miner Canaan. The miner’s Avalon servers will be operated by a major state-backed Japanese utility to support grid reliability by dynamically adjusting voltage, frequency, and hashrate to ease power fluctuations.
“As residential, AI compute, and high-density data centers place increasing pressure on national power systems, we are seeing rising demand for our energy-efficient, grid-interactive solutions across Asia, North America, and Europe. This project builds on a similar initiative we supported in the Netherlands last year, and we expect to expand such deployments with global energy and data-center partners in 2026.”
– Canaan CEO Nangeng Zhang said, at the time.
Russia
Russia is one of the key players in Bitcoin mining, which has been using the cryptocurrency to mitigate the impact of sanctions.
In 2024, the country passed a law allowing the use of cryptocurrencies in international settlements, before President Vladimir Putin legalized crypto mining. Most recently, Russia’s ninth-largest bank, Sovcombank, began offering Bitcoin-backed loans, while the state-owned rival, Sberbank, launched a pilot program late last year, signaling growing interest among Russian banks in miners and crypto businesses.
With the nation having vast stranded natural gas and hydropower, state energy giants like Gazprom and Rosneft controlling infrastructure, and industrial mining legalized, state-connected mining is extremely beneficial and a real possibility in Russia.
Kazakhstan
One of the world’s largest Bitcoin mining hubs, Kazakhstan has massive coal-based generation capacity and already licenses miners. In Nov. 2025, the Central Asian country established a national crypto reserve fund valued between half a billion and a billion dollars, to be funded by seized criminal assets and government-backed mining operations. But instead of holding BTC, the fund will invest in ETFs and crypto companies.
Pakistan
Pakistan has announced national plans to allocate 2,000 MW of electricity for Bitcoin mining facilities and create a national reserve “wallet” to hold BTC long-term. This step will mark the first phase of the country’s plans to use its surplus electricity to power crypto mining as well as AI data centres. Besides monetizing surplus energy, this is expected to create high-tech jobs and attract foreign investment.
“We’ve identified the sites where we have surplus electricity, and now we are assessing the economics and the impacts, and at the same time, we are also engaging with global miners and also AI compute operators.”
– Bilal Bin Saqib, Chairman of the country’s Virtual Assets Regulatory Authority (PVARA), said last week
Ethiopia
Africa’s leading Bitcoin mining hub is seeking partners to support a state-backed Bitcoin mining venture that will use hydroelectric power from the Grand Ethiopian Renaissance Dam.
Prime Minister Abiy Ahmed recently announced that state-owned Ethiopian Investment Holdings is seeking an investment partner. The goal, he noted, is to work with experienced partners who can provide not just capital but also technology and mining expertise.
Ethiopia is already hosting over two dozen licensed Bitcoin mining firms, which together control about 2.5% of the global Bitcoin hash rate and have generated more than $200 million in revenue.
Venezuela
This South American country is home to the world’s largest proven oil reserves and is facing hyperinflation. Recently, the President of Venezuela, Nicolás Maduro, who introduced government-issued cryptocurrency and state-supported crypto platforms, was captured by the US.
Venezuela is expected to have a “shadow reserve” of about 600,000 BTC. The reserve has reportedly resulted from a combination of oil settlements in USDT, gold swaps, and domestic mining seizures.
Paraguay
The South American country boasts abundant hydroelectric capacity at Itaipu Dam and has been debating leveraging it for Bitcoin mining with government support.
From An Experiment to Strategic National Asset
An ever-increasing number of nations are pursuing Bitcoin mining, a sign of Bitcoin’s maturity and growing role in the broader ecosystem.
Now, what makes Bitcoin so attractive to not just retail and institutions but also nations is that there’s no centralised entity, either a central bank or an administrator, that is in control of the network. Instead, it is maintained by a distributed network of computers worldwide.
Then there’s the hard cap of 21 million, which makes Bitcoin a scarce asset. On top of it, the Bitcoin network uses the SHA-256 algorithm and Proof-of-Work to secure transactions, making it highly resistant to fraud and hacking.
The trillion-dollar peer-to-peer digital cryptocurrency, which operates on a transparent, immutable blockchain, is also borderless. It enables fast, cross-border, censorship-resistant transfers, often at lower speeds and fees than traditional banking systems.
The most popular cryptocurrency is widely supported across exchanges, where anyone can buy, sell, or trade Bitcoin. But instead of buying from the open market, nations have been mining the digital asset, as it offers the potential for cost control. If one has access to inexpensive electricity, miners can get their hands on Bitcoin at a cost much lower than its market price.
Currently, more than 1 million kWh are required to mine 1 BTC, and with the price at $68K per coin, a miner needs the cost to be below 6.8 cents per kWh to turn a profit; otherwise, they’ll be at a loss.
Mining also generates a steady stream of newly minted Bitcoin and transaction fees daily, creating a reliable income stream. This not only smooths out the entry points but also prevents impact on market volatility, as a sizable buy order can increase the price, leading to an unfavourable cost basis.
So, by mining Bitcoin, nations can diversify their national reserves, especially where traditional exports are limited, without having to dip into their foreign currency reserves. This allows them to protect national wealth against fiat currency devaluation and inflation.
More importantly, mining contributes to Bitcoin network security. It is the foundational mechanism that secures the network by validating transactions. Miners are the ones who ensure the blockchain remains decentralized, immutable, and resistant to tampering.
This means that as nation-states become stakeholders in the Bitcoin network, they gain influence over how it operates. A nation’s influence or control over Bitcoin mining is proportional to its computational power in the network, known as hash power. The more hash power a nation has, the greater its influence on the Bitcoin network.
With BTC price hitting new peaks every cycle and its adoption rising, it’s possible that we may see a race for hash power in the future as nations compete to secure control over Bitcoin, which offers a global network for the settlement of an internet-native currency and an alternative base layer for building a more equitable global financial system.
So, by mining, nations can prepare for that future while gaining firsthand expertise in blockchain technology, digital asset management, and cybersecurity, which will also help them develop regulations that balance innovation and investor safety.
By utilizing it as critical infrastructure akin to data centers or telecom networks, governments can further transform energy management, accelerate renewable energy adoption, and unlock new economic, fiscal, and national security opportunities.
While the entry of nation-state actors into Bitcoin mining, which has historically been dominated by private entities, raises serious questions about the fairness of the network and its resistance to censorship, this could have a stabilizing effect, as government operations tend to have longer investment horizons. The involvement of nation-states could reduce hash rate volatility during market downturns, such as the one currently underway.
Profitability Crunch Against the Backdrop of a Maturing Market
While multiple nations have taken to mining Bitcoin, doing so in the US now costs more than its current market price.
According to data from MacroMicro, the average cost to mine one Bitcoin is $80,500, about 15% below the cryptocurrency’s market price, increasing financial pressure across the mining sector.
At its current price of about $68,000, BTC is down 23% year-to-date (YTD) and over 29% in the past year. It is now down 46% from its ATH of $126,000 hit four months ago. So, many miners are now unprofitable at these prices. As a result, miners continue to sell their Bitcoin holdings to fund their operations, cover energy expenses, and service debt.
Bitcoin USD (BTC +0.44%)
While the estimated Bitcoin production cost has fallen dramatically as network hashrate and mining difficulty declined, JPMorgan expects a rebound ahead:
“The decline in mining difficulty provides relief to remaining miners, enabling more efficient miners to capture the market share lost by higher cost miners forced offline, thus preventing a spiralling lower in bitcoin production costs. Indeed, we already see a rebound in the hashrate, pointing to a potential increase in mining difficulty and bitcoin production cost at the next network difficulty adjustment.”
Bitcoin hashrate recently experienced a double-digit percentage drop in mining difficulty, after reaching an all-time high in early November. This was the steepest drop since 2021, when China banned mining.
This was due to Bitcoin’s price drop, making mining unprofitable for higher-cost operators, causing them to shut down machines, and to severe winter storms in the US that forced large mining operations offline as grid operators cut power to conserve electricity, noted the analysts.
Despite the poor profitability, many entities continue to mine “because they believe in Bitcoin’s future,” noted VanEck, with two dozen nations mining and supporting the network’s long-term hash rate. Meanwhile, several Bitcoin mining companies have pivoted to become AI data centers.
Canaan recently said in an interview that in order to reduce its risk profile in the currently tough environments, it has been trying to keep their power price below 4 cents/kWh, “which has historically been sustainable through bear markets,” avoid excessive debt, and maintain hosting agreements that allow it to reduce or close operations in specific locations.
So, without a substantial increase in BTC’s price, miners would remain at a loss and be squeezed even further.
Historically, a significant drop in mining difficulty signals “capitulation.” In 2021, when miners were forced to shut down operations and relocate infrastructure due to the ban, mining difficulty dropped by about 45% over a three-month period, but recovered before the year was over.
“In the current juncture, certain high-cost miners have been selling their bitcoins to stay afloat/fund daily operations, or to reduce debt or to pivot to AI. This selling of bitcoins by miners amplified YTD bitcoin price pressures, but we believe that the exiting of higher cost miners has stabilized,” wrote the JPMorgan analysts.
Overall, the JPMorgan analysts are optimistic about crypto markets this year and “expect a further rise in the digital asset flow,” led by institutional investors. And once negative sentiments reverse, and the crypto king is perceived as attractive again as “gold as a potential hedge to a catastrophic scenario,” they see Bitcoin surging to new highs.
For now, though, the price continues to be depressed, sitting below the prior ATH. Currently, market sentiment is also weak, with volume decreasing, retail participation low, ongoing institutional outflows, and a cooling media narrative.
But this weakness is being recorded against a backdrop that points to a more mature market than in prior cycles.
This includes the institutional infrastructure getting stronger than ever, with the launch of spot Bitcoin ETFs fundamentally changing market access, allowing, for the first time, the likes of pension funds, RIAs, retirement accounts, and sovereign-style allocators easy, regulated exposure to the cryptocurrency.
Regulatory clarity is also improving significantly, with the GENIUS Act and CLARITY Act in the US and the MiCA framework in the EU.
Then there’s the macro backdrop, with elevated inflation, low interest rates, and geopolitical uncertainty, continuing to offer a positive outlook for the cryptocurrency.
Together, all these factors position Bitcoin as a sovereign reserve asset with a fixed supply and outside the control of central banks or any individual or entity. And if Bitcoin succeeds in the long term as digital gold, then its current valuation is small relative to that of the precious metal.
This makes the current depressed period a lucrative opportunity to build a long-term portfolio. If history is any guide, the majority of returns come from buying during deep drawdowns, with periods of boredom and fear producing asymmetrical upside.
But of course, this is also the hardest time to buy Bitcoin, with volatility low, media attention fading, and price feeling stuck. Yet these are the exact phases that precede major expansions; the key is patience and discipline.
