Traditional financial institutions and Bitcoin miners are paying attention to digital assets more than ever before. On April 22, Bitcoin ( BTC ) spot ETFs recorded $912 million in net inflows, demonstrating more than 500 times the 2025 daily average . Meanwhile, TheMinerMag reported on April 19 that Bitcoin’s mining difficulty rose by 1.4% . This marks the fourth positive difficulty adjustment since March. TheMinerMag notes that the record-high difficulty indicates ongoing investment into mining infrastructure, particularly from large-scale operators with newer, more efficient machines. Insurance Becomes Essential For Bitcoin Miners The need for mining insurance has thus become essential as institutional interest in Bitcoin gains traction, along with miners investing in new equipment. Patrick Datz, senior vice president of IMA Financial Group—a large, privately held insurance broker in the U.S.—told Cryptonews that the flow of institutional capital into the Bitcoin sector has increased the need for insurance. “Institutional investors typically invest into traditional industries and with those investments require insurance for those assets,” Datz said. “With an increase in these types of investors within the space, they are asking miners to procure insurance to protect those assets in the event of a loss.” Datz explained that IMA Financial Group has been working closely with Bitcoin miners to provide coverage for the last five years. “IMA Financial Group has a digital risk practice and works with over 200 clients in the digital asset ecosystem,” he said. “Bitcoin mining remains our largest vertical, as we work with over half of the publicly traded miners in the US, which make up over a third of the global hashrate.” Datz pointed out that the majority of miners already carry insurance, but the increase in institutional investors, combined with expanding operations , is causing companies to strengthen their current programs or to consider additional lines of coverage. 8/ Joseph Ziolkowski from @RelmInsurance states that there’s going to be a growing role for insurance in the growing crypto sector as it becomes a mainstream asset class. The institutionalization of crypto is creating new new needs of old industries. https://t.co/uqFoF9l2DI — DylanΞGra₿owski (@GrabowskiDylan) June 26, 2023 A Closer Look at Bitcoin Mining Insurance IMA Financial works closely with Relm Insurance, a Bermuda-based specialty insurer focused on custom coverage for the digital asset and blockchain ecosystem. George Frith, CEO of Relm Insurance, told Cryptonews that traditional insurers are often hesitant to underwrite risk in these sectors. “Relm fills a critical gap by offering aligned insurance coverage solutions to companies operating in high-growth industries,” he said. Frith explained that Bitcoin mining insurance is a risk management tool for what is a capital-intensive and technologically demanding industry. For instance, he pointed out that Bitcoin miners have high CapEx (investments in long-term assets such as buildings, land, machinery or equipment) and OpEx (general operating expenses) costs to contend with. Miners also often operate on thin margins. These operations therefore need insurance protection to shield them from unexpected events. To put this in perspective, Frith explained that it would be unusual for a Bitcoin miner to invest millions of dollars of CapEx experimenting with gas methane flaring facilities—which help reduce CO 2 equivalent emissions—if there was no property insurance in place. “Without insurance, if the facility is damaged and miners have to foot the bill individually, they’re more likely to opt for the lower risk emission-intensive options,” Frith said. Insurance Empowers Bitcoin Miners Frith further believes that insurance acts as a growth engine for Bitcoin miners, allowing businesses to take risks they would otherwise avoid. This has become especially important as the mining industry expands. Data shows that the global cryptocurrency mining market is expected to be valued at around $14.09 billion by 2035. Fortunately, Frith pointed out that mining companies now have access to the same product suite as most other industries including property, directors and officers (D&O), general liability (GL), cyber, and crime. Karoon Mackenchery, director of hosting services at Compass Mining—a provider of hosting and operational services for Bitcoin mining—told Cryptonews that Compass Mining has multiple insurance policies to protect against a variety of risks. He explained that these are key to the long-term success and risk mitigation strategies for the company. “We currently have the following insurance coverages in place—General Liability, Tech E&O/Cyber, D&O, Cargo and Property policy,” Mackenchery said. “Having these insurance policies in place allows us and our customers to have peace of mind in the event of any risk event that could disrupt mining operations.” Mackenchery explained that Compass can extend its property policy coverage to customers as well if they decide to opt in and purchase the “ Compass Protection ” product. “This gives our customers comfort in the event of a major loss due to fire, theft, or property damage events,” he remarked. Jill Ford, founder of Bitford Digital – a Texas-based company specializing in Bitcoin mining solutions and hosting services – told Cryptonews that for small miners, insurance is really about survival. “If a miner only has a handful of rigs and something goes wrong – like a fire, flood, or even a power surge – the company could be completely wiped out. Insurance helps cover the cost to repair or replace that gear so you’re not starting over from scratch,” Ford said. For large-scale miners, Ford explained that having insurance is less important for single pieces of hardware and more about protecting the entire operation. Why do #Bitcoin miners need insurance? Property covers machine repair/replacement General Liability covers 3rd-party property damage & injury Custody covers loss/theft of assets from hot/cold storage We're ready to continue the conversation tomorrow @MiningDisrupt ! — Sophia Zaller (@sophiamzaller) July 26, 2022 More Insurance Options On The Horizon As risks continue to increase for miners , insurance coverage will become more essential. For instance, Ford noted that as the price of mining machines rises due to tariffs , more miners are considering policies to protect themselves. “If they haven’t thought about insurance before, they definitely are now,” she remarked. Scott Offord, founder of Bitcoin Mining World, told Cryptonews that, as a result, more insurers will likely enter the market. “Specialized insurers will likely develop even more creative products, like coverage for regulatory shutdowns or fluctuations in Bitcoin’s value,” Offord said. “Ultimately, increased competition among insurers will drive costs down, making coverage more affordable and accessible, helping mature the industry overall.” While this may be, a handful of new insurance products are already underway. For example, Frith shared that Relm was the first insurance company to offer a Bitcoin denominated business-interruption product. “As other insurance companies become comfortable with the Bitcoin mining industry, there will be more capacity available,” he added. Miners hope this will be the case, as Mackenchery explained that securing insurance for Bitcoin mining has become much more reasonable over the past 2-3 years, though challenges still remain. “In the past, it was very difficult to secure adequate insurance for your mining operations,” he said. “The traditional insurance industry moves slowly and typically requires long periods of claim data to accurately price insurance products. In the case of Bitcoin mining insurance, insurers in the past were not as knowledgeable about our industry, which would typically lead to no coverage options being available.” Mackenchery added that insurance offerings have been severely overpriced to account for risks not being fully understood by carriers. Additionally, he pointed out that many insurance offerings tend to lack adequate coverage for the miner, leading to low or no claim payouts in the event of damage. “Nowadays insurers are understanding more of the risks in our industry and likewise see the business opportunity that comes with being able to offer insurance products to our industry,” Mackenchery commented. However, Mackenchery remarked that it remains challenging for retail miners to find insurance coverage—and when they can it is still usually priced very high. For large miners, Mackenchery explained that companies must have at least some basic knowledge about insurance in order to accurately convey the needs of their organization to carriers and brokers to get the best insurance coverage available. The post Bitcoin Miners Race for Insurance as $912M ETF Inflows Spark Institutional Boom appeared first on Cryptonews .
