Using a Self-Directed IRA to Invest in Crypto Infrastructure

Published on June 15, 2026

Cryptocurrency is a popular alternative asset to include in a self-directed IRA or solo (k). But beyond investing in Bitcoin and other cryptocurrencies, self-directed investors can use their retirement plan to invest in crypto-mining hardware and infrastructure – the equipment and platforms that help generate those assets.

What is crypto mining?
You may have heard the term “blockchain,” the public ledger used to record validated cryptocurrency transactions. Blockchain networks use crypto mining via powerful computers to finalize transactions. The “mining” term refers to the new coins that are released into circulation during the process.

Miners receive newly created coins and transaction fees in return for securing the network and ensuring transactions are legitimate.

The process used to mine cryptocurrency coins needs specialized hardware. Miners use machines called ASIC miners and heavy-duty power supply units (due to the high consumption of electricity used in the process). The infrastructure uses dedicated high-voltage circuits and because of the intense heat the machines generate, industrial-style cooling systems are also needed. ASIC miners are extremely loud and therefore require sound-dampening enclosures or a remote facility in which to operate.

Investing in crypto infrastructure

Since mining is not an activity for most people, investing in the hardware and/or infrastructure models is catching the attention of individuals who want to diversify their retirement portfolio by including “crypto-adjacent” investments. Plus, conducting solo mining in one’s home and paying the (high) electric bills from one’s bank violates IRS guidelines about self-dealing, which is why self-directed investors include investments into commercial facilities and third-party data centers in their self-directed IRA.

Aside from investing in publicly traded mining stocks, Bitcoin mining companies and related platforms, here are a few ways a SDIRA can make nontraditional investments in cryptocurrency infrastructure:

1) Purchase the hardware with IRA funds and then pay a colocation/hosting facility to house, power, and maintain the equipment. This investment tactic gives the account owner direct ownership through the self-directed IRA while taking advantage of wholesale electricity rates and industrial infrastructure already in place with a third party. There are providers in the market that facilitate the hardware purchase hosting setup.

2) Invest in cloud mining, in which hash power (also called hash rates) is rented from large mining operators. Hash rates are the metric used for the power that a computer or hardware uses to run and solve different hashing algorithms to generate new cryptocurrencies and enable transactions. The investor does not own or manage any of the equipment but there are high platform fees associated with this.

3) Private equity and venture capital investments in Web3/crypto startups, data centers, and other early-stage crypto infrastructure. Web3, which is relatively new, promotes internet decentralization. It is designed to be user-centric, and integrates trending technologies such as blockchain (and NFTs, augmented reality, and virtual reality) into everyday internet use.

Investment considerations

As with all self-directed investments, it is important that account owners thoroughly research the asset and assess the risk factor associated with crypto-related investments and operators (such as cloud mining facilities). In addition, income generated from cryptocurrency mining could trigger Unrelated Business Taxable Income (UBTI) if the IRS deems the investment to be a business activity rather than something that provides passive income. Therefore, as with all self-directed investments, we strongly recommend our clients consult their trusted tax advisor prior to making the investment and sending us the instructions.

If you have questions about self-direction in general, or about specific types of alternative assets allowed in self-directed IRAs, contact the Next Generation team between 9 a.m. and 5 p.m. (ET) at NewAccounts@NextGenerationTrust.com or 888.857.8058.