## Kilowatt Wasted Replacing Cheap Labor: How Bitcoin Redefines the Global Industrial Map

Since the 18th century, factories have pursued two main factors: low-cost labor and strategic ports. But Bitcoin has changed the game. Instead of seeking locations with the cheapest workers, Bitcoin (BTC) miners now focus on a completely different question: where is electricity being wasted most cheaply?

What makes Bitcoin unique compared to traditional heavy industries is that labor, logistics, and physical goods almost disappear from the location choice equation. A Bitcoin mining farm only needs a warehouse, a few technicians, stacked ASICs, and a fiber optic connection. The output is mined blockchain blocks, a completely virtual asset that requires no transportation or storage. This allows miners to connect directly to abandoned energy sources that traditional factories would never accept, and to move within a few months as conditions change.

## From Energy Cuts to Automated Money Machines

When renewable energy output exceeds transmission capacity, grid operators are forced to cut back or even pay consumers. California Independent System Operator (CAISO) reduced about 3.4 terawatt-hours (TWh) of solar and wind power in 2023, a 30% increase over 2022. In just the first half of 2024, this figure exceeded 2.4 TWh as electricity prices at many points frequently hit negative — meaning generators pay to feed electricity into the grid.

Bitcoin miners emerge as a strange solution. Riot Blockchain in Texas earned about $71 million from energy reserve credits in 2023 simply by turning off machines during peak demand. In 2024, this number doubled, and the company expects to exceed $46 million in credits in just the first three quarters. This means income from not mining Bitcoin can surpass income from mining it.

## Green Computing Infrastructure Rising Everywhere

Soluna Holdings has built modular data centers at wind and solar farms to absorb curtailed power. Bhutan, a small Himalayan country, partnered with Bitdeer to build at least 100 megawatts (MW) of Bitcoin mining facilities using excess hydropower, aiming to commercialize wasted kilowatts and export "green digital currency." The Bhutan government has even used crypto profits to pay civil servants.

El Salvador is executing a grand plan: Bitcoin City, a tax-free city at the foot of a volcano, will be powered by geothermal energy to supply both Bitcoin miners and residents. Bitcoin-backed bonds will finance this project.

## Hash-rate Moving Faster Than Any Factory

Before China tightened policies in 2021, miners there migrated seasonally: exploiting cheap hydropower in Sichuan during the rainy season, then moving to Xinjiang when the rains ended. After being expelled from China, the industry spread worldwide at a dizzying pace.

US hash-rate share increased from 5% to 38% by early 2022. Kazakhstan benefited greatly, with hash-rate rising to 18%, mostly from coal energy. Over the past year, US mining pools have mined over 41% of Bitcoin blocks. Recently, reports indicate China's market share quietly recovering to around 14%, focusing on provinces with surplus electricity.

ASICs are container-sized, depreciate over 2-3 years, and produce the same asset regardless of location. Unlike traditional steel mills or data centers, hash-rate can cross borders flexibly. When Kentucky exempts sales tax on electricity used for crypto mining, or Texas offers long-term PPA contracts with renewable plants, miners only need a few months to redirect.

## Cold Climate and Grid Regulation: New Advantages

Crusoe Energy brings modular generators to remote oil wells in West Texas, using associated gas that would otherwise be flared to run ASIC machines. Transmission issues and renewable energy curtailments create extremely low electricity prices in certain areas where Bitcoin miners gather.

MintGreen in British Columbia leverages an additional benefit: using waste heat from mining to heat regional networks, potentially replacing natural gas boilers. Kryptovault in Norway redirects heat to dry wood and seaweed. Marathon Digital Holdings (MARA) has experimented in Finland, where a 2 MW facility inside a heating plant provides high-temperature heat as an alternative to biomass or gas.

A low-cost electricity miner can sell excess heat, generating two revenue streams from a single energy input. This makes cold climate regions with heating needs attractive.

## Location Factors: Cheap Electricity, Infrastructure, Policies

Bitcoin miners concentrate where three conditions converge: (1) cheap or wasted energy, (2) limited transmission causing negative prices, and (3) local policies welcoming or indifferent.

Legal jurisdictions are fiercely competing. Kentucky exempts sales and use tax on electricity for commercial crypto mining. HB 230 clearly states its purpose: to support the deep computing industry. El Salvador combines geothermal plans, tax incentives, priority access to volcano energy, and even digital currency experiments. Bhutan provides national hydropower, legal support, and a $500 million fund.

Policy toolkit includes: electricity tax exemptions, fast connections, long-term PPA contracts for curtailed power, and in some cases, even digital currency experiments.

## AI Is Learning to Follow, But Has Limits

The US Department of Energy warned in 2024 that AI-driven data centers could add tens of gigawatts of new load. They emphasize the need for flexible demand — exactly how Bitcoin operates.

Soluna currently promotes a "modular green computing" model, switching between crypto mining and other cloud workloads to profit from curtailed electricity. China’s offshore underwater data centers run on 24 MW of offshore wind with seawater cooling.

However, AI faces a constraint that Bitcoin does not: network latency and SLA agreements (SLA). A Bitcoin miner can tolerate hours of downtime. An AI service serving real-time queries cannot. This will keep top-tier AI workloads close to fiber optic cables and major cities, but batch training and inference tasks are prime candidates for remote, energy-rich locations.

## A New Generation of "Energy Cities" Will Emerge

The global industrial map is being redrawn by a force entirely different from the past two centuries. Instead of cheap labor, it’s wasted electrons. Instead of ports, it’s transformer stations and fiber optic links.

By 2035, clusters where power plants, substations, fiber optics, and a few hundred skilled workers converge will define what we call "cities" — regions prioritized for machinery where humans are secondary, not the driving force.

## Hidden Risks

Expanding transmission infrastructure could erase the advantage of renewable energy curtailments. Policy reversals could trap billions of dollars of investments. AI latency requirements may limit the amount of work that can move. And a commodity cycle downturn could destroy this entire economic model.

But the trend is clear. Bhutan profits from hydropower via hash-rate. Texas pays miners to turn off during hot seasons. Kentucky exempts electricity tax for mining. Chinese miners quietly restart in provinces with surplus power. Jurisdictions are rewriting auction laws for the global computing economy.

If the industrial era was organized around portside handcuffs, the computing era may be organized around surplus kilowatts in frontier regions. Bitcoin is merely the pioneer revealing a horizon where the global map is already torn open.