Bitcoin mining, the process of validating transactions by solving complex mathematical puzzles requiring significant computing power, has come a long way since the original cryptocurrency launched in early 2009. From hobbyists using standard computers in their bedroom or garage, it has grown into an emerging industry that both supports the Bitcoin ecosystem and contributes to economic revitalization. It could also potentially deliver outsized investment returns.
Growing at scale
As the industry matured, miners moved from domestic settings to small and mid-size warehouses. However, these days most activity takes place in large industrial plants operated by publicly-listed US companies. For instance, Core Scientific operates six sites in the US ranging in size from 30,000 feet to 300,000 feet (and has another under development).
The US has become the most popular mining location after China clamped down on crypto activity in 2021. Data gathered by CoinShares from operators’ quarterly reports shows that the US had 48 sites in January 2024, an increase of 23% in the space of three years. This growth is reflected in the industry’s power consumption. According to the same sources, the total available megawatts (MW) used by US miners has more than doubled from 1,945 MW in January 2022 to 4,815 MW two years later.
CoinShares research also shows that revenues have kept up with the industry’s expansion. Only five years after Bitcoin mining started in the US, revenues generated by operators now account for 2.45% of the iron and steel industry, one of the country’s largest sectors. A publicly-listed miner’s monthly report estimates that over the last four years, revenues have grown by 6,764%%, and operators listed on US stock markets are expected to generate $3 billion in 2024. These figures highlight US dominance of the global mining industry and its capacity to create value and drive economic activity.
Bitcoin Mining Benefits to Many Other Industries
Bitcoin miners have stimulated growth across multiple industries. The application-specific integrated circuit (ASIC) chips powering their rigs are produced by the same manufacturers that supply tech companies such as Apple. Factories in places like Malaysia, China and domestically in Pennsylvania build those rigs and ship to operators around the world, fuelling international trade and supporting the logistics industry. Mining has also driven innovation in the management of the US energy grid: adding alternative sources like wind and solar is typically complex and time-consuming, but miners can purchase power directly from these suppliers as long as they’re connected to the internet.
U.S. Economy Revitalization
Mining’s dependence on significant amounts of electricity has helped revitalize the US economy, especially in rural areas that have experienced job losses as a result of globalization and have struggled to replace them due to a lack of infrastructure. The industry is effectively subsidizing the development of new energy facilities, saving local governments from having to dip into taxpayer funds.
Texas has emerged as a popular choice for miners. It accounts for nearly a third of the computer power used to support the Bitcoin network in 2023 due to its favorable regulations, ample space and cheap electricity. The Lone Star state deregulated its energy market in the 1990s, which lowered prices, and alternative sources contribute a relatively high share to its mix. According to analyst Ember, more than a quarter of its electricity came from wind power (22%) and solar power (5%) in 2022. Miners can also take advantage of the Electric Reliability Council of Texas’s policy of paying industrial users for lowering their consumption when demand unexpectedly rises. Riot Platforms earned nearly $32 million for scaling back operations during a heatwave in August 2023.
Childress County, located northwest of Dallas with a population of just over 6,500, is one of the rural areas benefitting from Bitcoin mining. Iris Energy, a NASDAQ-listed operator, opened a facility on a 420 acre site in 2023 which will create more than 50 jobs when fully operational.
Other states have also benefited from the industry’s capital expenditure and infrastructure development. CleanSpark expanded its largest facility in Sandersville, Georgia (population: 5,536) in February 2024, while Core Scientific based one of its biggest sites (250,000 square feet) in Marble, Carolina (population: 282). But miners aren’t just building new facilities. Greenidge Generation converted one of New York’s last coal plants, based in upstate Dresden, to accommodate Bitcoin mining in 2020. It houses 29,000 rigs and generated revenues of over $12 million in the third quarter of 2024.
Job Creation and Economic Impact
Bitcoin mining has created a substantial number of new jobs across the country. According to data published by listed operators, direct employment nearly doubled between January 2022 and January 2024, from 1,016 jobs to 1,684.
The industry also indirectly contributes to the labor market. Miners could add a further 10,700 jobs in 2024 based on a multiplier of 6.4 used by ‘big four’ accounting firm PricewaterhouseCoopers for data centers. That means each mining job creates another 6.4 in associated industries like transport, construction and electrical engineering.
This effect has been transformative for towns such as Rockdale, Texas (population: 5,588), which lost 1,700 jobs and 30% of the county’s tax revenue when an Alcoa aluminum plant closed in 2008. The town is now home to several mining facilities including the largest in the US, launched in 2023 by Riot Platforms.
‘Bitcoin miners are deeply invested in the communities where they work. In Rockdale, these companies now employ hundreds of people. They’ve created mid-skill jobs, allowing locals to find well-paying employment without leaving town,’ wrote Mayor Ward Roddam in an opinion column recently published in the Austin American-Statesman. He went on to say that Bitcoin miners have invested more than $1 billion in the town and are among the biggest taxpayers.
Investor takeaway
Investors searching for emerging technologies and industries that could be the next Apple or Amazon should consider Bitcoin mining.
The industry is growing fast, judging by its increasing power consumption and rising revenues. In addition to underpinning the Bitcoin ecosystem, it benefits multiple other industries, such as the companies manufacturing mining rigs and the chips powering them. Mining is also helping to revitalize the US economy, especially rural areas that have lost jobs due to globalization. Operators have opened facilities in towns with populations of 5,000 or less, creating jobs and boosting tax revenues.
To gain exposure to bitcoin miners, investors can either buy shares in listed operators directly, or invest through an actively managed exchange-traded fund (ETF) that strategically invests in public companies in the bitcoin mining sector.
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