TL;DR: Bitcoin ETFs are a clean, liquid way to get price exposure: ideal for smaller allocations or investors who want simplicity. Bitcoin mining offers something different: infrastructure ownership, a potential cost basis below spot price, direct self-custody of mined BTC, and tax advantages through depreciation. For accredited investors with longer time horizons and a priority on tax efficiency, mining deserves serious consideration. This post breaks down both options honestly so you can decide which fits your situation.
When bitcoin hit the mainstream investment conversation, the options were essentially: buy it directly, or ignore it. The approval of spot Bitcoin ETFs in early 2024 changed that. Now there's a third path, one with a familiar structure (fund-based, regulated, reportable) that removed a lot of friction for institutional and retail investors alike.
But "easier" doesn't always mean "better," especially for accredited investors with more sophisticated financial goals. The ETF vs. mining question isn't really about which asset wins. It's about what kind of exposure you actually want, what tax position you're trying to optimize, and what role bitcoin plays in your broader portfolio.
Let's look at both honestly.
Spot Bitcoin ETFs (products like those offered by BlackRock, Fidelity, and others) hold actual bitcoin on behalf of investors. When you buy shares, you're buying price exposure to bitcoin without holding the asset yourself.
That's genuinely useful. Here's what works well:
Liquidity. You can buy or sell shares during market hours, the same way you'd trade a stock or a gold ETF. No wallets, no private keys, no on-chain transactions.
Simplicity. ETF shares live in your brokerage account. They're reportable, transferable, and familiar to any financial advisor or accountant.
Accessibility. Anyone can buy them: no accreditation required, no minimum investment, no operational complexity. That's a real advantage for allocations where overhead isn't worth it.
Custody handled for you. The fund custodian holds the bitcoin. You don't have to.
The same features that make ETFs easy also define their limits.
Management fees. ETFs carry annual expense ratios (typically 0.20% to 1.50%) that compound over time. On a $1M position held for a decade, that's not a rounding error.
No cost basis advantage. Your cost basis is whatever you paid for shares. If bitcoin is trading at $90,000 and you buy ETF shares, your basis is $90,000. You participate in upside from that point forward, but not below it.
No depreciation deductions. ETF shares are securities. You can't depreciate them. The tax efficiency stops at capital gains treatment.
Counterparty exposure. You're relying on the custodian to hold the underlying bitcoin correctly. That risk is real, even if it's small with major fund managers. Your exposure to bitcoin is mediated through a legal and operational structure you don't control.
No self-custody option. If you believe in the principle of "not your keys, not your coins," an ETF gives you no path there. The bitcoin is never yours in a direct sense.
Mining is a fundamentally different form of bitcoin exposure. Instead of buying bitcoin (or exposure to bitcoin), you're deploying capital into infrastructure that produces bitcoin as an output. That distinction matters for several reasons.
When you mine bitcoin, your effective cost basis is your all-in production cost: hardware, power, operations. Depending on your setup and energy costs, it's possible to produce bitcoin at a cost significantly below its current market price. That gap is real economic value that ETF investors simply can't access.
For a deeper look at how mining compares to direct bitcoin purchases, see our post on Bitcoin Mining vs. Buying Bitcoin: Which Is the Better Investment.
Mining hardware is capital equipment. Under current U.S. tax law, that equipment can be depreciated (often aggressively in year one through bonus depreciation provisions). For accredited investors with significant ordinary income, this is not a minor benefit. It's the kind of structural tax advantage that changes effective returns materially.
ETF shares offer no equivalent. They're securities, not equipment.
Bitcoin mined through your operation goes directly to a wallet you control. There's no custodian, no intermediary, no fund structure standing between you and the asset. For investors who want the option of cold storage or direct control of their bitcoin holdings, mining is the only path that delivers it from the point of production.
Mining equipment (ASICs, power infrastructure, cooling systems) is physical capital. It has residual value, can be repositioned or sold, and represents ownership of a productive asset rather than a financial instrument. This distinction matters to investors who think about bitcoin allocation as part of a broader real-asset strategy.
An ETF investor benefits from exactly one thing: bitcoin's price appreciation. A mining investor has additional levers: the spread between production cost and spot price, equipment appreciation or depreciation, the operational improvements that can lower cost over time, and the optionality around when and how to sell mined bitcoin.
Bitcoin ETFs are designed for everyone. They're regulated, accessible, and deliberately simple. That's their purpose.
Mining operations structured for outside investors are a different animal. They're private placements, typically available only to accredited investors, and that's where the structural tax and ownership advantages actually live.
Insight's 21M program was built specifically for this. It's designed for accredited investors who want the economics of bitcoin mining (the cost basis advantage, the depreciation, the direct custody) without the operational burden of building and running a facility from scratch. You're not buying a financial product. You're participating in an operating infrastructure with real equipment, real energy contracts, and real bitcoin production.
That's not something available to retail ETF investors. It's specifically a benefit of accredited investor access and the structures that come with it.
ETFs are the right tool in certain situations. Be honest about which situation you're in.
| Feature | Bitcoin ETF | Bitcoin Mining (via 21M) |
|---|---|---|
| Access | Anyone | Accredited investors only |
| Liquidity | High (daily trading) | Low (illiquid investment) |
| Cost basis | Market price at purchase | Potential below-market production cost |
| Tax depreciation | No | Yes (capital equipment) |
| Self-custody option | No | Yes (mined BTC to your wallet) |
| Management fees | Yes (ongoing) | No fund-level fee drag |
| Counterparty risk | Custodian | Operational risk |
| Real asset ownership | No | Yes (infrastructure) |
| Return vectors | Price appreciation only | Price + production spread + operations |
| Minimum investment | Low (any amount) | Higher threshold |
Most investors who are interested in mining don't want to buy hardware, negotiate power contracts, and hire operations staff. That's where Insight's 21M program comes in.
21M is a structured opportunity for accredited investors to participate in industrial-scale bitcoin mining, with the tax advantages, direct custody of mined bitcoin, and real infrastructure ownership, without the operational lift of doing it independently.
It's not an ETF. It's not a fund. It's a different category of bitcoin exposure, designed specifically for the investor profile where mining's advantages are most meaningful.
If you're an accredited investor evaluating your bitcoin options, the ETF vs. mining question is worth taking seriously. The right answer depends on your capital size, time horizon, tax situation, and what you actually want out of a bitcoin allocation.
Learn more about how 21M works: insightbtc.io/21m
Or reach out directly: insightbtc.io/contact
This content is for informational purposes only and does not constitute financial, tax, or investment advice. Participation in Insight Services' 21M program is available to accredited investors only as defined under applicable securities law. Bitcoin mining and bitcoin investment carry significant risks, including loss of principal. Consult a qualified financial advisor and tax professional before making any investment decision.
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