Bitcoin mining booms in some rural areas, thanks to ban on it in China, but locals complain about noise, few jobs

Blockware Mining's cryptocurrency mine at Paducah, Kentucky (Lexington Herald-Leader photo by Ryan C. Hermens)

In the past year or so, "Companies have moved thousands of specialized computers into Kentucky to 'mine' for bitcoin, a cryptocurrency — or virtual currency — sometimes referred to as digital gold. Critics say it’s bad for the environment and produces few jobs," rural Kentucky reporter Bill Estep reports for the Lexington Herald-Leader.

Here is a more in-depth primer about bitcoin mining, but essentially, shoe box-sized computers "earn" bitcoin by being the first to find the correct answer to complex calculations, which are aimed at preventing counterfeiting and stealing. But all that "mining" computation, and the massive fans needed to keep computers from overheating, is noisy and takes a lot of electricity. An official in southeastern Kentucky's Harlan County, for example, told Estep that a local project will use as much power as eight Walmart supercenters.

Cheap electricity in Kentucky, about 10% lower than the national average, has made the state attractive to bitcoin miners. "Kentucky had 18.7 percent of the collective computing power in the U.S devoted to bitcoin mining as of last October, according to Foundry, a company that operates a large bitcoin mining pool, CNBC said in a story. That was second only to New York, with 19.9 percent of the computing power. Georgia was next at 17.3 percent and Texas was home to 14 percent of the computing power, called hashrate," Estep reports. "Companies have set up racks of mining rigs on shelves in industrial buildings in the western end of the state, at sites left empty when coal mines shut down in Eastern Kentucky, even in shipping containers to get up and running as quickly as possible." 

Kentucky legislators passed two tax breaks in 2021 meant to attract bitcoin miners, but the industry is controversial: "Some people don’t like the idea of forgoing tax revenue from cryptocurrency miners — or other companies, for that matter — while other needs in Kentucky aren’t well-funded; others see echoes of coal mining in cryptocurrency mining, with the profits going to out-of-state corporations," Estep reports. Also, though bitcoin mining creates construction and set-up jobs, the operations only provide a handful of permanent jobs after the mine is up and running.

One example in East Tennessee shows what happens when the noise of bitcoin mining inspires buyer's remorse, Kevin Williams reports for The Washington Post. In the rural community of Limestone, a bitcoin mining plant opened up last April. The town initially welcomed the plant and hoped for more jobs and an economic boost. Now residents and local officials say the mine is sometimes as loud as a jet engine. The county has filed suit against the company and the local electricity provider that owns the land the mine sits on, and county commissioners have blocked attempts to open a second mine.

"Objections from local residents have complicated prospects for cryptocurrency mining in Appalachia — despite cheap land, plentiful power and utility companies hungry for additional revenue streams to replace the manufacturing customers that have been leaving for decades," Williams reports.

About two-thirds of the world's bitcoin mines were in China until its government banned it last year, citing bitcoin's price volatility as a threat to citizens' assets and the nation's overall financial stability, Estep reports. Similar concerns prompted President Biden to order a review of the cryptocurrency industry, but in the meantime bitcoin mining operations have been increasingly popular in the U.S.