Bitcoin Mining Shifts Focus to Wasted Energy Over Cheap Labor: How Curtailment and Mobility Are Redefining Industrial Geography
Introduction
For two centuries, industrial expansion was dictated by the availability of cheap labor and proximity to transportation hubs like ports and railways. Factories clustered where hands were plentiful and logistics efficient. Today, a seismic shift is underway. Bitcoin miners are pioneering a new industrial model, bypassing traditional factors like labor and logistics to chase the world’s cheapest stranded or wasted megawatts. From wind-swept plateaus in Texas to hydro spillways in Bhutan, these operations ask one simple question: where is energy being produced that the grid cannot absorb? This article explores how Bitcoin mining’s unique mobility and product—pure digital block rewards—enable it to monetize curtailed power, transform grid dynamics, and rewrite the rules of industrial siting.
Curtailment Creates a New Subsidy
Grid operators frequently face situations where renewable generation exceeds demand or transmission capacity, leading to curtailment—intentionally reducing output. In these instances, electricity prices can plunge into negative territory, meaning generators pay to offload power. This phenomenon has created an indirect subsidy for flexible energy consumers.
The California Independent System Operator (CAISO) curtailed about 3.4 TWh of utility-scale solar and wind in 2023, a figure roughly 30% higher than in 2022. In just the first half of 2024, CAISO reported over 2.4 TWh of curtailed energy as mid-day solar generation routinely overshot grid needs.
Bitcoin miners have emerged as ideal candidates to absorb this surplus. Companies like Soluna build modular data centers at renewable projects specifically to consume power the grid cannot use. In Texas, Riot Platforms demonstrated the financial potential of this model. In 2023, Riot earned approximately $71 million in power credits by voluntarily curtailing its mining operations during periods of peak demand and high electricity prices. These credits often exceeded the value of the Bitcoin it would have mined during those periods. The strategy proved so successful that in 2025, Riot is on track to surpass previous earnings, having already booked more than $46 million in credits within the first three quarters.
A 2023 paper published in Resource and Energy Economics modeled Bitcoin mining demand within the Electric Reliability Council of Texas (ERCOT) market. The research indicated that while mining can incentivize the build-out of additional renewable capacity, it may also lead to increased emissions unless miners actively function as demand-response resources.
Hash Rate Moves Faster Than Factories
The global Bitcoin network’s hash rate—its total computational power—possesses a liquidity that traditional industries lack. Application-Specific Integrated Circuits (ASICs) are container-sized assets that depreciate rapidly, typically over two to three years, and produce an identical virtual product regardless of their physical location. This allows mining operations to migrate with a speed impossible for steel mills or semiconductor fabs.
This mobility was starkly illustrated in 2021 following China's mining ban. The United States' share of the global hash rate skyrocketed from single digits to roughly 38% by early 2022. Concurrently, Kazakhstan’s share surged to around 18% as miners relocated entire farms to its coal-heavy grid. For the past year, U.S.-based mining pools have consistently mined over 41% of all Bitcoin blocks.
More recently, Reuters reported that China’s mining share has quietly rebounded to approximately 14%, with operations concentrating in provinces possessing surplus power. This fluid movement is a direct response to policy and energy economics. When Kentucky exempts mining electricity from sales tax or Bhutan offers long-term hydropower contracts, miners can pivot their operations in a matter of months.
A Programmable Knob and Wasted-Watts Frontier
Bitcoin mining’s interruptibility makes it a valuable grid-stabilization tool. ERCOT classifies certain large loads as Controllable Load Resources (CLRs), which can be shut down within seconds to maintain grid frequency during supply shortages.
Companies like Lancium design their facilities to operate as CLRs. Riot’s operational reports from July and August 2023 read like grid-services earnings statements, detailing millions of dollars in power and demand-response credits earned by curtailing mining during heat waves, alongside a reduced number of self-mined coins.
This dynamic creates a symbiotic relationship:
- Miners secure interruptible power at rock-bottom rates.
- Grid operators gain a flexible, instantaneous buffer for tight supply conditions.
- The grid can integrate a higher penetration of renewables without immediate, costly transmission upgrades.
This model is being deployed globally:
- Bhutan: The sovereign wealth fund partnered with Bitdeer on a $500 million green-crypto initiative, building at least 100 MW of mining capacity powered by surplus hydropower.
- West Texas: Miners cluster where wind and solar generation outpaces transmission capacity, signing Power Purchase Agreements (PPAs) with renewable plants.
- Oil Fields: Crusoe Energy deploys modular data centers at remote oil wells, using associated natural gas that would otherwise be flared.
Miners effectively colonize a new "wasted-watts frontier," defined by three overlapping conditions: cheap/stranded energy, constrained transmission, and welcoming local policy.
AI Adopts the Playbook, With Limits
The explosive growth of artificial intelligence is creating unprecedented electricity demand. The U.S. Department of Energy’s Secretary’s Energy Advisory Board warned in 2024 that AI-driven data centers could add tens of gigawatts of new load, stressing the need for flexible demand and innovative siting models.
Companies like Soluna now market themselves as providers of "modular green compute," capable of switching between digital asset mining and other cloud workloads to monetize curtailed renewable energy. China's new underwater data center off the coast of Shanghai, running on roughly 24 MW of offshore wind power with seawater cooling, is another example of energy-centric siting.
However, AI faces constraints that Bitcoin does not. A Bitcoin miner can tolerate hours of downtime and seconds of network latency without consequence. An AI inference endpoint serving real-time user queries cannot. This necessity for low latency and high uptime will keep mission-critical AI workloads anchored near major metropolitan fiber hubs.
That said, non-latency-sensitive workloads like AI model training and batch inference are increasingly seen as candidates for remote, energy-rich locations. The fundamental shift is visible: industrial bidding is starting to prioritize "energy plus machines" over labor and logistics.
Heat Reuse Adds a Secondary Revenue Stream
Beyond earning block rewards and grid services credits, miners are unlocking value from their primary byproduct: heat. By capturing and repurposing this thermal energy, operations can create a secondary revenue stream from the same electricity input.
- MintGreen in British Columbia pipes immersion-cooled mining heat into a municipal district-heating network, claiming it can displace natural gas boilers.
- Kryptovault in Norway redirects mining heat to dry logs and seaweed.
- A pilot project in Finland by MARA involved a 2 MW mining installation inside a heating plant, providing a high-temperature heat source that would otherwise require biomass or natural gas.
This capability makes cold-climate sites with existing district-heating infrastructure particularly attractive, adding another layer of economic viability to operations already benefiting from low-cost power.
Policy as a Competitive Tool
Governments are actively crafting policies to attract Bitcoin mining capital, often conceding that the industry creates relatively few jobs compared to its energy consumption.
- Kentucky: Passed HB 230, which exempts electricity used in commercial crypto-mining from state sales and use tax.
- Bhutan: Offers sovereign hydropower resources, regulatory support, and access to a $500 million fund through its partnership with Bitdeer.
- El Salvador: Granted Bitcoin legal tender status and proposed "Bitcoin City," a tax-haven city at the base of a volcano powered by geothermal energy, funded by Bitcoin-backed bonds.
The policy toolkit is evolving to include tax exemptions on electricity and hardware, fast-tracked interconnection permits, long-term PPAs for curtailed power, and sovereign financial backing. Jurisdictions are competing to offer the cheapest electrons with the fewest regulatory hurdles.
What’s at Stake: Redrawing the Industrial Map
For two centuries, industrial geography was optimized around moving physical goods through ports and railheads, with cheap labor as a co-driver. The Bitcoin mining boom represents the first time a global, capital-intensive industry has emerged whose product is natively digital and whose primary operational constraint is the price of energy.
This has revealed vast reservoirs of "wasted watts" around the globe and quantified what governments are willing to pay—in tax breaks, interconnection priority, and political capital—to convert those electrons into hashrate.
The future trajectory holds both promise and uncertainty:
- Transmission build-outs could eliminate the curtailment opportunities that miners currently exploit.
- Policy reversals could strand billions in capital expenditure.
- AI's specific requirements may limit how much compute can follow this nomadic model.
- Commodity cycles could collapse hashrate economics entirely.
However, the directional trend is clear. Bhutan monetizes its hydro through hash. Texas pays miners to stabilize its grid. Kentucky exempts mining from electricity taxes. These are not isolated events; they are signals of jurisdictions rewriting the bidding rules for compute-intensive industry.
If the industrial age was organized around hands by the harbor, the compute age is organizing around watts at the edge. Bitcoin mining is simply the first mover exposing where the economic map is already tearing apart at the seams.
Mentioned in this article: Bitcoin (BTC), CAISO, ERCOT, Soluna, Riot Platforms (Riot), Lancium, Bitdeer Technologies (Bitdeer), Crusoe Energy Systems LLC (Crusoe), MintGreen Inc., Kryptovault AS (Kryptovault), MARA.