Record-breaking flows into exchange-traded funds may be reshaping markets in ways that even the Federal Reserve can’t control.

New data show U.S.-listed ETFs have become a dominant force in capital markets. According to a Friday press release by ETFGI, an independent consultancy, assets invested in U.S. ETFs hit a record $12.19 trillion at the end of August, up from $10.35 trillion at the close of 2024. Bloomberg, which highlighted the surge on Friday, noted the flows are challenging the traditional influence of the Federal Reserve.

Investors poured $120.65 billion into ETFs during August alone, lifting year-to-date inflows to $799 billion — the highest on record. By comparison, the prior full-year record was $643 billion in 2024.

The growth is concentrated among the biggest providers. iShares leads with $3.64 trillion in assets, followed closely by Vanguard with $3.52 trillion and State Street’s SPDR family at $1.68 trillion.

Together, those three firms control nearly three-quarters of the U.S. ETF market. Equity ETFs drew the largest share of August inflows at $42 billion, while fixed-income funds added $32 billion and commodity ETFs nearly $5 billion.

Crypto-linked ETFs are now a meaningful piece of the picture.

Data from SoSoValue show U.S.-listed spot bitcoin and ether ETFs manage more than $120 billion combined, led by BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Trust (FBTC). Bitcoin ETFs alone account for more than $100 billion, equal to about 4% of bitcoin’s $2.1 trillion market cap. Ether ETFs add another $20 billion, despite launching only earlier this year.

The surge underscores how ETFs — traditional and crypto alike — have become the vehicle of choice for investors of all sizes. For many, the flows are automatic.

In the U.S., much of the cash comes from retirement accounts known as 401(k)s, where workers put aside part of every paycheck.

A growing share of that money goes into “target-date funds.” These funds automatically shift investments — moving gradually from stocks into bonds — as savers approach retirement age. Model portfolios and robo-advisers follow similar rules, automatically directing flows into ETFs without investors making day-to-day choices.

Bloomberg described this as an “autopilot” effect: every two weeks, millions of workers’ contributions are funneled into index funds that buy the same baskets of stocks, regardless of valuations, headlines or Fed policy. Analysts cited by Bloomberg say this steady demand helps explain why U.S. equity indexes keep climbing even as data on jobs and inflation show signs of strain.

The trend raises questions about the Fed’s influence.

Traditionally, interest rate cuts or hikes sent strong signals that rippled through stocks, bonds, and commodities. Lower rates typically encouraged risk-taking, while higher rates reined it in. But with ETFs absorbing hundreds of billions of dollars on a set schedule, markets may be less sensitive to central bank cues.

That tension is especially clear this month. With the Fed expected to cut rates by a quarter point on Sept. 17, stocks sit near record highs and gold trades above $3,600 an ounce.

Bitcoin, meanwhile, is trading at around $116,000, not far from its all-time high of $124,000 set in mid August.

Stock, bond and crypto ETFs have seen strong inflows, suggesting investors are positioning for easier money — but also reflecting a structural tide of passive allocations.

Supporters told Bloomberg the rise of ETFs has lowered costs and broadened access to markets. But critics quoted in the same report warn that the sheer scale of inflows could amplify volatility if redemptions cluster in a downturn, since ETFs move whole baskets of securities at once.

As Bloomberg put it, this “perpetual machine” of passive investing may be reshaping markets in ways that even the central bank struggles to counter.

Bitcoin’s rally lost momentum in August, and slowing corporate accumulation may explain why.

Tracked treasury entities added 47,718 BTC last month ($5.2 billion), down from more than 100,000 BTC in July, according to the latest Bitcoin Treasuries Adoption Report. That brought total holdings across public companies, private firms, governments and ETFs to 3.68 million BTC, valued at $400 billion at month-end. The monthly increase of 1.2% was far weaker than July’s 4.6%.

This easing in BTC acquisitions by corporate entities could offer an explanation for BTC’s rally to $123,000 not being sustained. Bitcoin hit an all-time high in mid August, but fell over 11.5% by the end of the month to sit below $109,000.

The slowdown came despite aggressive fundraising announcements. More than $15 billion in equity raises were outlined by treasury firms including Strategy (MSTR), KindlyMD (NAKA) and Metaplanet (3350). Those commitments have yet to translate into immediate purchases, leaving a gap between fundraising headlines and actual market impact.

Even with the softer pace, August saw important milestones. Public company holdings crossed the 1 million BTC threshold for the first time, doubling from late 2024, according to the report.

Among individual firms, healthcare company KindlyMD made the second-largest buy of the month with a 5,744 BTC purchase worth $679 million. Japan’s Metaplanet added 1,859 BTC across four different transactions.

Crypto exchange Bullish (BLSH) also joining the treasury rankings after its August IPO. The firm revealed it has held 24,000 BTC since March, valued at $2.6 billion at the end of August. CEO Tom Farley described the company’s strategy as part of an ongoing institutional wave, telling CNBC it “feels like institutional investors think this could be the moment.» The exchange’s parent company Bullish Global is also the owner of CoinDesk.

Despite those high-profile moves, the aggregate value of tracked treasuries fell from $428 billion in July to $400 billion in August as bitcoin’s price eased to $108,695 by the end of the month.

When Core Scientific signed a $3.5 billion deal to host artificial intelligence (AI) data centers earlier this year, it wasn’t chasing the next crypto token — it was chasing a steadier paycheck. Once known for its vast fleets of bitcoin mining rigs, the company is now part of a growing trend: converting energy-intensive mining operations into high-performance AI facilities.

Bitcoin miners like Core, Hut 8 (HUT) and TeraWulf (WULF) are swapping ASIC machines — the dedicated bitcoin mining computer — for GPU clusters, driven by the lure of AI’s explosive growth and the harsh economics of crypto mining.

Power play

It’s no secret that bitcoin mining requires an extensive amount of energy, which is the biggest cost of minting a new digital asset.

Back in the 2021 bull run, when the Bitcoin network’s hashrate and difficulty were low, miners were making out like bandits with margins as much as 90%. Then came the brutal crypto winter and the halving event, which slashed the mining reward in half. In 2025, with surging hashrate and energy prices, miners are now struggling to survive with razor-thin margins.

However, the need for power—the biggest input cost—became a blessing in disguise for these miners, who needed a different strategy to diversify their revenue sources.

Due to rising competition for mining, the miners continued to procure more machines to stay afloat, and with it came the need for more megawatts of electricity at a cheaper price. Miners invested heavily in securing these low-cost energy sources, such as hydroelectric or stranded natural gas sites, and developed expertise in managing high-density cooling and electrical systems—skills honed during the crypto boom of the early 2020s.

This is what captured the attention of AI and cloud computing firms. While bitcoin relies on specialized ASICs, AI thrives on versatile GPUs like Nvidia’s H100 series, which require similar high-power environments but for parallel processing tasks in machine learning. Instead of building out data centers from scratch, taking over mining infrastructure, which already has power ready, became a faster way to grow an increasing appetite for AI-related infrastructure.

Essentially, these miners aren’t just pivoting—they’re retrofitting.

The cooling systems, low-cost energy contracts, and power-dense infrastructure they built during the crypto boom now serve a new purpose: feeding the AI models of companies like OpenAI and Google.

Firms like Crusoe Energy sold off mining assets to focus solely on AI, deploying GPU clusters in remote, energy-rich locations that mirror the decentralized ethos of crypto but now fuel centralized AI hyperscalers.

Terraforming AI

Bitcoin mining has effectively «terraformed» the terrain for AI compute by building out scalable, power-efficient infrastructure that AI desperately needs.

As Nicholas Gregory, Board Director at Fragrant Prosperity, noted, «It can be argued bitcoin paved the way for digital dollar payments as can be seen with USDT/Tether. It also looks like bitcoin terraformed data centres for AI/GPU compute.»

This pre-existing «terraforming» allows miners to retrofit facilities quickly, often in under a year, compared to the multi-year timelines for traditional data center builds. Firms like Crusoe Energy sold off mining assets to focus solely on AI, deploying GPU clusters in remote, energy-rich locations that mirror the decentralized ethos of crypto but now fuel centralized AI hyperscalers.

Higher returns

In practice, it means miners can flip a facility in less than a year—far faster than the multi-year timeline of a new data center.

But AI isn’t a cheap upgrade.

Bitcoin mining setups are relatively modest, with costs ranging from $300,000 to $800,000 per megawatt (MW) excluding ASICs, allowing for quick scalability in response to market cycles. Meanwhile, AI infrastructure demands significantly higher capex due to the need for advanced liquid cooling, redundant power systems, and the GPUs themselves, which can cost tens of thousands per unit and face global supply shortages. Despite the steeper upfront costs, AI offers miners up to 25 times more revenue per kilowatt-hour than bitcoin mining, making the pivot economically compelling amid rising energy prices and declining crypto profitability.

A niche industry worth billions

As AI continues to surge and crypto profits tighten, bitcoin mining could become a niche game—one reserved for energy-rich regions or highly efficient players, especially as the next in 2028 could render many operations unprofitable without breakthroughs in efficiency or energy costs.

While projections show the global crypto mining market growing to $3.3 billion by 2030, at a modest 6.9% CAGR, the billions would be overshadowed by AI’s exponential expansion. According to KBV Research, the global AI in mining market is projected to reach $435.94 billion by 2032, expanding at a compound annual growth rate (CAGR) of 40.6%.

With investors already seeing dollar signs in this shift, the broader trend suggests the future is either a hybrid or a full conversion to AI, where stable contracts with hyperscalers promise longevity over crypto’s boom-bust cycles.

This evolution not only repurposes idle assets but also underscores how yesterday’s crypto frontiers are forging tomorrow’s AI empires.