For two centuries, factories have sought cheap labor and dense ports. Today, miners roll into windy plateaus and hydraulic spillways and are asking a much simpler question. Where is the cheapest wasted power?
The map will tilt as we allow computing to move from energy to people to energy.
Heavy industry has always sought cheap energy, but it still required bodies and ships. The novelty of Bitcoin (BTC) is that labor, logistics, and physical products are completely removed from the location equation.
A mining plant might consist of a warehouse, a dozen or so staff, a stack of ASICs, and a fiber line. Its output is pure block rewards, not bulky goods that need to be shipped. This allows miners to connect to truly stalled or curtailed energy that traditional factories couldn’t be bothered to access, making it available in a hurry when policies and prices change.
Bitcoin isn’t the first energy-hungry industry, but it’s the first large-scale industry where the main location bid is “give me the cheapest useless megawatts and I’ll show up” and has little to do with labor.
Reductions create new subsidies
CAISO reduced utility-scale solar and wind power generation by approximately 3.4 billion kWh in 2023, an increase of approximately 30% from 2022, and more than 2.4 billion kWh was reduced in the first half of 2024 alone as daytime generation routinely exceeded demand and transmission limits.
Node prices are often negative. Power producers still want tax credits from renewable energy, paying for power to the grid because outages are costly.
A miner appears as a strange new bidder. Soluna is building modular data centers in wind and solar projects that absorb electricity that the grid cannot absorb. In Texas, Riot received approximately $71 million in electricity credits in 2023 due to power reductions during peak demand periods, an amount that often more than offset the BTC it was scheduled to mine.
In 2024, Bitcoin mining companies turned their inhibitions into tens of millions of dollars in credits, and are on track to surpass that in 2025, posting more than $46 million in credits in the first three quarters alone.
A 2023 paper in Resources and Energy Economics models Bitcoin demand in ERCOT and finds that miners can increase emissions as well as renewable capacity, and that many of the downsides are mitigated if miners operate as demand-responsive resources.
Power curtailment and negative pricing are de facto subsidies to those who can show up precisely where and when power is cheapest, and mining is designed that way.
Hashrate changes faster than factories
Miners moved around China seasonally, chasing cheap rain-season hydroelectric power in Sichuan province, then moving to coal regions like Xinjiang when the rains stopped.
As the Chinese government tightened its crackdown in 2021, its mobility expanded globally. The US hashrate share jumped from single digits to about 38% by early 2022, while Kazakhstan’s share jumped to about 18% as miners lifted entire farms and reforested coal-rich grids.
Over the past year, US-based mining pools have mined over 41% of Bitcoin blocks.
Reuters recently reported that China’s share has quietly recovered to about 14%, concentrated in regions with surplus electricity.
ASICs are container-sized, depreciate over two to three years, and produce the same virtual assets no matter where they are placed. This enables cross-border hashrate in a way that is not possible in steel mills or AI campuses.
Miners could pivot in a matter of months if Kentucky waived excise taxes on mined power or if Bhutan offered long-term hydropower contracts.
The frontier of programmable knobs and wasted wattage
ERCOT treats certain large loads as “controllable load resources” that can be reduced within seconds to stabilize the frequency.
Rancium and other mining facilities brand themselves as CLR, pledging to cut back on extraction almost immediately if prices soar or reserves dwindle. Riot’s July and August 2023 report is written like a grid services earnings release, recording millions of power and demand response credits while far fewer coins were self-mined during the heatwave.
The OECD and national regulators are currently discussing Bitcoin as a flexible load that could deepen the penetration of renewable energy or crowd out other uses.
Miners bid for intermittent power at the lowest price, grid operators get the buffer they need when supply is tight, and the grid absorbs more renewable energy without overbuilding transmission.
Bhutan’s sovereign wealth fund and Bitdeer are building at least 100MW of hydro-powered mining, monetizing surplus hydropower and exporting “clean” coins as part of a $500 million green cryptocurrency initiative. Officials were reportedly using profits from cryptocurrencies to pay government salaries.
In West Texas, wind and solar farms are experiencing transmission bottlenecks, leading to curtailment and negative electricity prices.
It’s home to many U.S. miners, who have signed PPAs with renewable power plants to ensure they have capacity that the grid can’t always absorb. Crusoe Energy deploys modular generators and ASICs in remote oil wells, using associated gas that is typically flared.
Miners flock together when three conditions converge: energy is cheap or stranded, power transmission is curtailed, and local policies are welcoming or ignore miners. Bitcoin mining can reach places that labor-intensive industries could never reach.
AI employs playbooks with limitations
The US Secretary of Energy’s Energy Advisory Committee has warned that AI-driven data center demand could add tens of gigawatts of new load in 2024. It emphasized the need for flexible demand and new location models.
Companies like Soluna are now touting themselves as “modular green computing” that monetizes saved wind and solar power by switching between digital assets and other cloud workloads.
China’s new underwater data center off the coast of Shanghai runs about 24 MW almost entirely from offshore wind power with seawater cooling.
Friction comes from latency and uptime SLAs. Bitcoin miners can tolerate hours of downtime or seconds of network lag.
This is not possible with AI inference endpoints that process real-time queries. This keeps first-tier AI workloads close to fiber hubs and major cities, while training execution and batch inference are already candidates for energy-rich remote sites.
El Salvador’s proposed Bitcoin City would be a tax haven city at the base of a volcano, where geothermal power would power Bitcoin mining and Bitcoin-backed bonds would fund both the town and the miners.
Whether it gets built or not, it shows that the government is touting “energy and machinery” as an anchor, not labor. The Upper Midwest and Great Lakes are experiencing a data center boom, attracting hyperscalers that offer cheap power and water despite limited local labor.
Bhutan’s hydroelectrically powered mining campuses are located far from major cities.
The Civic’s fabric is thin. Hundreds of highly skilled workers service the racks and substations. Tax revenue flows in, but job creation per megawatt is minimal. Local protests center around noise and heat, not labor competition.
By 2035, clusters of power plants, substations, fiber optics, and hundreds of workers that define “cities” will become plausible machine-first zones with incidental human settlements.
Increase revenue by reusing heat
British Columbia’s Mint Green claims it can pipe immersion-cooled mine heat into the city’s district heating network, replacing natural gas boilers. Cryptovaults in Norway channel mining heat into dry logs and seaweed.
MARA conducted a pilot in Finland, where a 2 MW mining facility within a heating plant provided the high temperature source required for biomass or gas.
Miners paying the lowest electricity rates can also sell waste heat, giving them two sources of income from the same energy input. This makes cold regions, where there is a demand for district heating, a new attractive location.
Kentucky’s HB 230 exempts electricity used in commercial cryptocurrency mining from state sales and use taxes.
Supporters acknowledge that the industry creates few jobs relative to the size of the electricity subsidy. Bhutan and Bitdeer’s partnership bundles sovereign hydropower, regulatory support, and a $500 million fund.
El Salvador has wrapped up its geothermal project and Bitcoin City with legal tender status, tax breaks, and preferential access to geothermal energy from volcanoes.
This policy toolkit includes power and hardware tax exemptions, rapid interconnections, long-term PPAs for power reduction, and possibly experiments with sovereign balance sheets and fiat currencies.
Jurisdictions compete to provide the cheapest and most reliable flow of electrons with the fewest hurdles allowed.
what is the problem
For two centuries, industrial geography has been optimized to transport raw materials and finished goods via ports and railheads, with cheap labor and market access as co-promoters.
The Bitcoin mining boom marks the first time that a global, capital-intensive industry has been created where the product is natively digital and where energy prices are the main constraint.
This reveals where the world’s “wasted watts” reside and how much governments are willing to pay in tax breaks, interconnection priorities and political capital to turn those watts into hash.
If AI and general-purpose computing adopt the same mobility, the map of future data centers will be drawn not by cheap human settlements, but by places where stranded electrons, cold water, and quiet environments coexist. Transmission augmentation could erase the edges of the reduction.
The policy shift could hold up billions of dollars in capital investment. AI latency requirements may limit the amount of workloads that can be migrated. And the commodity cycle could completely disrupt the hashrate economy.
But I can see the direction. Bhutan monetizes hydropower through hashishing. Texas is paying miners to stay out of work during the heat wave.
Kentucky exempts mining power from taxes. Chinese miners are quietly rebooting in regions with surplus power. These are jurisdictions that are rewriting bidding rules for compute-intensive industries.
If the industrial age was organized around the hand by the port, the computing age may be organized around the watt at the edge. Bitcoin is just a pioneer in revealing where the map is already about to be torn apart.
