## Bitcoin redraws the industrial map: When electricity is cheaper than labor

The two-century history of industry is a story of movement—factories seeking ports, cheap labor, and markets. But Bitcoin is rewriting these rules. Instead of chasing cheap human labor, Bitcoin miners are targeting something else: wasted kilowatts. When assets are purely data (Bitcoin blocks), energy becomes the sole decisive factor, not labor or infrastructure.

## Cheap energy left idle: From market failure to opportunity

Across the United States, wind and solar power plants produce excess output that the grid cannot absorb. California Independent System Operator (CAISO) recorded over 3.4 TWh of renewable energy curtailed in 2023, a 30% increase over 2022. The figure continues to be eye-popping—more than 2.4 TWh cut in just the first half of 2024.

When electricity is surplus, prices can even turn negative: generators pay the grid to shut down because stopping costs less. This creates a perfect opportunity for Bitcoin. Companies like Soluna build data centers right at renewable generation sites to "absorb" the curtailed megawatts. In Texas, Riot Platforms earned $71 million in electricity credits in 2023 simply by turning off during peak demand, and this figure is projected to surpass $46 million in the first three quarters of 2025.

## Hash rate mobility: When computation moves faster than machines

Bitcoin used to follow seasonal patterns—Chinese miners moved between Sichuan hydropower during the rainy season and Xinjiang during the dry season. When Beijing cracked down in 2021, the global mining economy instantly globalized. US hash rate share surged from a small fraction to 38% by early 2022. Kazakhstan increased to 18% as miners flocked to cheap coal energy.

What sets this apart from traditional industries? ASICs—containerized mining machines—depreciate in 2-3 years and produce the same type of asset regardless of location. This allows hash rate to cross borders in ways that steel mills or AI centers cannot. When Kentucky exempts sales tax on mining electricity, or Bhutan signs long-term hydropower contracts, miners shift locations within months.

## "Kilowatt cities": Where machines are prioritized over people

Texas, the Southeast, and the Western highlands have become mining hubs. The social structure here is fragile: only a few hundred technicians keep the power plants, substations, and fiber optic cables running. Taxes flow to local governments, but the jobs created per megawatt are minimal—completely different from traditional industries.

ERCOT (Texas grid operator) considers large mining loads as "controllable loads"—they can be turned off within seconds to stabilize frequency. Lancium and other facilities commit to near-instant load shedding when needed. Riot’s annual reports resemble grid service profit reports, with electricity credits exceeding the amount of BTC mined during heatwaves.

Bhutan and Bitdeer are building 100 MW of mining using hydroelectric power as part of a $500 million "green crypto" initiative—commercializing surplus energy, exporting "clean" coins, and Bhutan’s government using profits to pay civil servants. Crusoe Energy brings modular generators and ASICs to oil wells, utilizing associated gas that would otherwise be flared.

## Waste heat reuse: A second revenue stream from the same kilowatt

MintGreen in British Columbia channels heat from mining operations into regional heating systems, replacing natural gas boilers. Kryptovault Norway uses mining heat to dry wood and seaweed. MARA experiments in Finland, where a 2 MW facility inside a heating plant provides high-temperature heat as a substitute for biomass or natural gas.

A low-cost electricity miner can sell waste heat, creating two revenue streams from the same energy input. This makes cold climate locations with heating needs highly attractive.

## Policy landscape: Competitive jurisdictions

Kentucky exempts sales and use tax on electricity used for commercial Bitcoin mining. El Salvador packages geothermal plans and Bitcoin City (a tax-free city at the foot of a volcano) in fiat currency, with tax incentives and prioritized access to geothermal energy.

The standard policy toolkit includes: tax exemptions on electricity and hardware, high-speed fiber internet, long-term Power Purchase Agreements (PPA) for curtailed power, and in some cases, the right to issue tokens or sovereign privileges. Competitive jurisdictions offer the cheapest, most reliable power with the fewest licensing hurdles.

## Limits of the model: Why AI is different

The calculation goals of AI and Bitcoin are different in one key respect: network latency and uptime SLA.

A Bitcoin miner can tolerate hours of downtime and network delays of a few seconds. An AI endpoint serving real-time queries cannot— it must be close to fiber optic hubs and major cities. However, batch training and foundational inference tasks are prime candidates for remote, energy-rich locations.

A 2024 US Department of Energy Advisory warns that AI-driven data center demand could add tens of gigawatts of new load. Companies like Soluna now promote themselves as "modular green computing," flexibly shifting between AI workloads and crypto mining to profit from curtailed renewable energy.

An offshore data center near Shanghai, operated by China, runs 24 MW entirely on offshore wind, with seawater cooling. But latency and reliability remain obstacles.

## The map redraws

If the industrial age organized around ports, then the computing age organizes around kilowatts at the frontier—where no one wants to be cut off from power, and policies welcome machines over cheap labor.

Bhutan earns money from hydropower via hashing. Texas pays miners to shut down during heatwaves. Kentucky exempts electricity from mining. Chinese miners quietly restart in provinces with excess power. These are legal jurisdictions rewriting the rules for the compute-intensive industry.

Bitcoin is merely the pioneer exposing the map’s torn edges: the economy is no longer about labor, but about wasted kilowatts and governments willing to pay how much to turn them into hash.