This Could Save the Industry from Crisis Amid Trade War
Bitcoin mining companies should hold their mined cryptocurrency and use it as collateral for fiat-denominated loans, rather than selling BTC and losing the potential upside from an appreciating asset. This conclusion comes from John Glover, Chief Investment Officer at Bitcoin lending firm Ledn. In the midst of intensifying trade tensions and growing competition in the industry, leveraging the increasingly divergent fundamentals between Bitcoin and fiat currencies could provide a lifeline for miners experiencing financial difficulties.
Bitcoin Retention Strategy Through Collateralized Lending
In an interview with Cointelegraph, John Glover stated that holding BTC carries several key advantages, including potential asset appreciation, tax deferment, and the opportunity to generate additional revenue by lending out bitcoins held in corporate treasuries.
“If you are mining, you are generating all this Bitcoin. You understand the thesis behind Bitcoin and why it is likely going to continue to appreciate in the future. You do not want to sell any of your Bitcoin,” the executive emphasized.
The proposed debt-based approach is similar to the strategy employed by companies like Strategy, which issue corporate debt and equity to finance Bitcoin acquisition. Such companies profit from the diverging fundamentals of BTC and the fiat currencies in which their corporate capital raises are denominated.
Glover argues that the strategy where miners use mined bitcoins as collateral to obtain loans in fiat currency creates an asymmetric opportunity: companies pay their operating expenses in a depreciating currency while retaining an asset they expect to significantly appreciate in value.
“It’s like playing chess where you protect your king—Bitcoin—by using pawns—fiat money—to pay for ongoing expenses,” Glover explains, using a vivid metaphor to illustrate the proposed strategy.
Bitcoin-backed loans could be a valuable lifeline for miners struggling in the highly competitive industry, which is facing increased pressure due to the ongoing trade tensions brought on by the Trump administration’s protectionist trade policies and macroeconomic uncertainty.
Trade War Pressures on the Mining Industry
The Bitcoin mining industry is characterized by high competition and capital costs that increase over time as more powerful computing resources are used to mine blocks and secure the network.
BTC mining hashprice, a metric used to gauge miner profitability, has collapsed as ever-increasing computing resources are deployed to secure the network. According to Hashrate Index data, this key metric shows a long-term decline despite periodic recoveries connected to Bitcoin price increases.
US President Trump’s sweeping trade tariffs have cast a cloud over the already competitive sector, raising fears that import duties will raise the cost of mining equipment, like application-specific integrated circuits (ASICs), to unsustainable levels.
“The new tariffs could increase equipment costs by 25-35%, making many mining operations unprofitable even at current Bitcoin prices,” notes Alex Moshkov, a cryptocurrency market analyst from BitMEX Research. “In this environment, miners need to find new financial strategies if they want to stay afloat.”
It is in this context that Glover’s proposal for using Bitcoin-backed loans becomes particularly relevant for mining companies seeking to maintain their operations under increasing pressure.
Mass Bitcoin Selloff by Miners
Mining firms collectively sold over 40% of their mined supply produced in March 2025 amid the heightened macroeconomic uncertainty and fears that the ongoing trade tensions will cause price increases across the board.
According to TheMinerMag, this 40% sell-off marked the reversal of a trend that began post-halving, in April 2024, and represented the highest monthly BTC liquidation among miners since October 2024.
“We’re seeing a clear shift in holding strategy among major public miners,” comments Sarah Chen, a researcher from TheMinerMag. “While for most of 2024 after the halving, miners were accumulating bitcoins in anticipation of price increases, they are now forced to sell their reserves to cover rising operational costs.”
This trend is particularly concerning as it coincides with a period when Bitcoin’s network hashrate continues to grow, further reducing the yield for individual miners. In conditions where competition for block rewards intensifies and operational costs rise, Glover’s strategy of using Bitcoin-backed loans may offer an alternative path for miners.
“Miners are in a unique position as they naturally accumulate an asset that is expected to appreciate in value relative to fiat currencies,” Glover concludes. “Using this asset as collateral, rather than liquidating it, allows them to retain the upside potential while obtaining the necessary liquidity to fund ongoing operations.”
If this strategy becomes widespread, it could significantly alter the financial dynamics of the mining industry, potentially leading to reduced Bitcoin sales by miners and enhanced supply scarcity in the market. Ultimately, this could contribute to long-term Bitcoin price appreciation, creating a self-reinforcing cycle that benefits both miners and the broader community of Bitcoin holders.