Rising US Debt, Tokenization, and AI Power Demand: Why BlackRock Thinks Crypto Is Entering a New Phase

For more than a decade, debates around Bitcoin and crypto have often sounded like an argument between two extremes: early adopters claiming that a parallel financial system is inevitable, and incumbents insisting that digital assets are a passing fad. In 2025, that framing looks increasingly outdated. The most striking evidence comes not from crypto-native circles but from the world’s largest asset manager, BlackRock.

In its latest macro commentary, BlackRock highlights a simple but uncomfortable reality: US government debt is growing rapidly, and persistent fiscal deficits are reshaping the risk–reward profile of traditional long-dated Treasuries. At the same time, BlackRock’s own product shelf now includes one of the largest Bitcoin funds on the planet, a suite of tokenization initiatives and an evolving view of stablecoins and digital-market infrastructure.

Put differently, the firm is not just observing the crypto ecosystem from afar; it is actively helping to design the rails through which institutional capital can participate. In this article we explore how rising public debt, new ETF structures, tokenization, stablecoins and even AI-driven electricity demand are combining into a new narrative for Bitcoin and digital assets.

1. US Public Debt and the Shrinking Comfort Zone of Long Bonds

For decades, the backbone of global portfolios has been simple: equities for growth, government bonds for stability. That formula relies on one key assumption – that long-term sovereign debt is the ultimate safe asset. BlackRock’s latest fixed-income outlook questions how robust that assumption remains in a world where US debt has climbed above 100% of GDP and issuance needs are structurally high.

In recent commentary, Larry Fink has gone a step further, warning that persistent US fiscal deficits could eventually undermine confidence in the dollar’s purchasing power, nudging investors toward alternative stores of value, including Bitcoin. This is not a call for an overnight abandonment of Treasuries, but it is a recognition that concentration risk at the core of the system is rising.

From a portfolio-construction perspective, there are at least three implications:

• Term premium repricing: Investors may demand higher yields to hold long-dated government bonds, weakening their defensive role and increasing mark-to-market volatility.
• Search for diversifiers: Assets whose value does not depend directly on government solvency – such as high-quality equities, infrastructure, real estate and certain commodities – take on greater importance.
• Interest in non-sovereign “stores of value”: Gold and, increasingly, Bitcoin are viewed as potential complements to bond-heavy portfolios rather than as fringe exposures.

BlackRock’s message is subtle but clear: when public borrowing becomes a structural feature rather than a short-term response to crisis, institutions cannot assume that yesterday’s hedges will behave the same way tomorrow. That macro backdrop is one reason why digital assets are moving from the periphery toward mainstream discussion.

2. Bitcoin’s Journey From Criticised Curiosity to Institutional Tool

It is easy to forget how strongly some senior figures once dismissed Bitcoin. Several years ago, Fink himself associated it primarily with problematic activity. Today, after conversations with thousands of clients and a multi-billion-dollar ETF launch, he publicly describes Bitcoin as a potential “digital gold” and sees a role for it in diversified portfolios.

The launch of the iShares Bitcoin Trust (IBIT) in the United States has been central to that shift. Within its first year, IBIT rapidly became one of the largest commodity ETFs globally and a key gateway through which pensions, wealth managers and other regulated investors gain exposure to BTC. Options on IBIT have also climbed into the top tier of ETF derivatives markets by trading volume, a sign that sophisticated players are actively hedging and structuring around Bitcoin rather than ignoring it.

This institutionalisation matters for at least two reasons:

• Access and compliance: Many large investors cannot, or prefer not to, hold spot BTC directly on crypto exchanges. ETF wrappers and listed derivatives allow them to integrate Bitcoin into their existing risk, reporting and custody frameworks.
• Market structure: As more flows pass through regulated venues, price discovery increasingly reflects a mix of crypto-native and traditional capital. That reduces the gap between “on-chain sentiment” and “Wall Street sentiment,” even if it does not eliminate volatility.

For long-time observers, seeing BlackRock run one of the world’s largest Bitcoin funds at the same time it warns about the implications of rising US debt is a powerful symbol. It tells clients that, in the firm’s view, Bitcoin is no longer just a speculative experiment; it is part of the conversation about how to navigate a changing macro regime.

3. Tokenization: From Slogan to Infrastructure

Bitcoin is only one piece of BlackRock’s digital thesis. Fink has repeatedly argued that tokenization – representing traditional financial assets as tokens on a blockchain – is likely to be “the next generation for markets,” comparing its potential impact to the early internet era in the mid-1990s.

Tokenization, in this context, is not about meme coins or collectibles. It is about taking familiar assets like government bonds, corporate debt or real-estate interests and placing them on shared ledgers with standardized rules for settlement and ownership.

Why does that matter for investors who already have access to these assets through conventional channels?

• 24/7 settlement and fractional ownership: Tokenized instruments can, in principle, trade around the clock and be divided into smaller units, making them accessible to a wider range of participants.

• Operational efficiency: Shared ledgers can reduce reconciliation overhead, lower settlement risk and improve transparency in complex structures like securitized products.

• Composability: Once assets live on programmable infrastructure, it becomes easier to build new products – for example, portfolios that automatically rebalance between tokenized Treasuries, stablecoins and Bitcoin based on predefined rules.

For BlackRock, tokenization is not separate from its Bitcoin strategy; it is the broader framework into which Bitcoin, stablecoins and on-chain funds all plug. In its vision, large parts of the existing financial system will eventually run on tokenized rails, with crypto-native assets and tokenized traditional instruments sharing the same infrastructure.

4. Stablecoins as the Dollar’s On-Chain Plumbing

Any tokenized future needs reliable cash-like instruments to function as the “oil” of the system. That is where stablecoins come in. These digital tokens are designed to track the value of traditional currencies, most commonly the US dollar, and are typically backed by short-term government securities and cash equivalents.

From a macro perspective, stablecoins play a double role:

• Extension of the dollar system: Because many stablecoins hold US Treasury bills as collateral, they effectively extend demand for US government debt into digital markets, even as questions about long-term fiscal sustainability grow.
• Bridge between TradFi and DeFi: Stablecoins allow capital to move between centralised exchanges, on-chain lending platforms, payments applications and tokenized funds without constantly exiting back into bank deposits.

BlackRock and other large managers have become significant players in this space by helping to manage the reserve assets that back certain stablecoins or by offering tokenized cash-management vehicles. That gives them a front-row seat as the plumbing of on-chain finance evolves, and it aligns directly with their broader message about tokenization and alternative assets.

Importantly, this does not mean that stablecoins or Bitcoin are positioned as replacements for the dollar. Instead, they are presented as complementary tools: one for upgrading settlement and liquidity, the other as a potential long-horizon store of value that is independent of any single government balance sheet.

5. AI, Electricity Demand and Bitcoin Miners’ New Role

The final element in BlackRock’s emerging narrative sits far from trading screens: electricity. Generative AI and large-scale computing are driving a rapid increase in global demand for data centres and power. McKinsey and other analysts estimate that AI-related workloads could cause data-centre electricity consumption to grow several-fold over the next decade.

Bitcoin miners, who already operate energy-intensive infrastructure, are uniquely positioned in this environment. Their business model typically involves securing long-term power contracts, building or leasing data-centre capacity and optimising hardware for high-throughput computation. As AI workloads explode, that combination becomes attractive to a broader set of clients.

Several trends follow from this:

• Dual-use infrastructure: Some mining firms are exploring or already offering high-performance computing services alongside Bitcoin mining, effectively renting surplus capacity to AI and cloud clients.

• Energy-market partnerships: Because miners can adjust their load more flexibly than many industrial users, they can help balance grids that incorporate intermittent renewables, which in turn supports the integration of cleaner energy over time.

• New revenue mixes: If AI-related services grow, miners may become less dependent on BTC price alone, smoothing earnings and making their cash flows more understandable for traditional investors.

This linkage between AI and mining is not just a side story. It feeds back into the way institutions think about Bitcoin as an asset. If mining companies evolve into hybrid energy–compute providers, they can become part of broader infrastructure and sustainability discussions rather than being seen solely through the lens of block rewards.

6. How Rising US Debt Connects to This Entire Picture

Stepping back, it is worth asking: how do all these threads – US debt, Bitcoin ETFs, tokenization, stablecoins and AI-driven power demand – connect in a coherent macro story?

One way to frame it is as follows:

1. Fiscal backdrop shifts the “risk-free” anchor. Persistent deficits and rising public debt raise questions about how safe and return-generating long-dated government bonds will be over the next decade.

2. Investors look for diversified stores of value. Bitcoin and gold enter the conversation not as replacements for bonds, but as additional tools that can help diversify portfolios if the traditional anchor wobbles.

3. Market infrastructure upgrades to meet demand. Spot ETFs like IBIT, together with listed options, give institutions a familiar way to access Bitcoin exposure and manage risk.

4. Tokenization and stablecoins modernise the plumbing. On-chain representations of bonds, funds and cash-like instruments allow portfolios to be managed on shared ledgers, increasing flexibility and potentially reducing frictions.

5. AI energy demand reframes mining. As data centres proliferate, miners can become partners in balancing power grids and providing compute, which influences how investors view the long-term viability of the network that underpins Bitcoin.

BlackRock’s argument is not that crypto solves the fiscal challenges of major economies. Rather, it is that this constellation of technologies – digital assets, tokenization, stablecoins and AI-linked infrastructure – is shaping the menu of options that investors will use to respond to those challenges.

7. What This Does Not Mean

In an environment of enthusiastic headlines, it is just as important to be clear about what this narrative does not imply:

• No guarantee of linear price appreciation. The fact that large institutions are active in Bitcoin and tokenization does not eliminate volatility or downside risk. Digital assets remain highly sensitive to macro conditions, regulation and technology developments.

• No automatic replacement of traditional assets. Government bonds, equities and real assets are still the core building blocks of most portfolios. Bitcoin and tokenized instruments are potential complements, not magic substitutes.

• No exemption from due diligence. The presence of a brand-name asset manager does not mean that every product or structure is suitable for every investor. Understanding fees, liquidity, custody, counterparty arrangements and risk is as important as ever.

From a brand-safety perspective, the healthiest way to read BlackRock’s stance is as a call for more sophisticated conversations, not as a simple endorsement of any specific trade. Rising US debt, AI power demand and new digital rails are structural forces; but the right response for any given institution or individual depends on their goals, constraints and risk tolerance.

8. Practical, Educational Takeaways

For readers who follow both macro trends and digital assets, a few practical lessons emerge from this evolving story:

1. Macro and micro are now intertwined. Discussions about US deficits, central-bank balance sheets and long-term yields are no longer separate from discussions about Bitcoin ETFs or tokenized bonds. They feed into the same portfolio questions.

2. Infrastructure matters as much as narrative. The rise of regulated spot ETFs, improving custody, clearer accounting treatment and tokenization pilots are all infrastructure upgrades. They are what make it possible for cautious investors to participate in ways that align with their governance standards.

3. Stablecoins and tokenization are “boring” on purpose. The most important digital tools for institutions may not be the ones that move fastest in price, but the ones that quietly modernise settlement, collateral and cash management.

4. Energy and compute are becoming central themes. Understanding Bitcoin’s role increasingly requires some familiarity with electricity markets, data centres and AI workloads, not just price charts.

5. Diversification remains central. Even in BlackRock’s own commentary, Bitcoin is framed as one part of a diversified response to a changing world, not as a single answer to complex fiscal and monetary dynamics.

Conclusion: From Fringe Debate to Structural Integration

A decade ago, it would have been hard to imagine the chief executive of a $10+ trillion asset manager discussing Bitcoin, US debt sustainability, tokenization and AI data centres in the same breath. Yet that is exactly where the conversation has arrived. Rising public debt is forcing investors to think harder about concentration risk in traditional safe assets. At the same time, new digital-market infrastructure – from Bitcoin ETFs and stablecoins to tokenized funds – is giving them more tools to respond.

BlackRock’s evolving stance does not mean that crypto is without risk or that fiscal challenges have a simple solution. But it does mark a transition: from seeing digital assets as an outsider narrative to treating them as part of the mainstream toolkit for navigating a complex macro landscape. For informed observers, the most interesting question is no longer whether crypto will intersect with traditional finance, but how thoughtfully that integration will be managed over the coming decade.

Disclaimer: This article is for informational and educational purposes only. It does not constitute financial, investment, legal or tax advice, and it should not be treated as a recommendation to buy, sell or hold any digital asset or financial product. Digital-asset markets and macroeconomic conditions can change quickly and involve significant risk, including the possibility of total loss. Readers should conduct their own research and, where appropriate, consult qualified professionals before making decisions related to cryptocurrencies, tokenized assets or any other investments.