Just Transition
From coal to crypto: Mining in Appalachia

Eastern Kentucky is a region that can’t leave mining behind. 

It has long been coal country, but mining jobs have dried up as the world weans itself off coal. 

As old mines close, new miners are moving in, working the digital terrain for a prize you cannot see: cryptocurrency. 

Our correspondent Avi Asher-Schapiro takes us to Appalachia where cheap land, tax breaks and a well-developed energy grid make for perfect bitcoin mining conditions.

But this new economy is not likely to create many new jobs or reduce Kentucky’s carbon footprint. 

Banks of powerful servers run day and night, consuming huge amounts of electricity – in this case, electricity from coal and natural gas. 

Outside investors and some local players stand to get rich. 

But the thousands of former coal miners are not at the table.

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Read the full transcript below or via the transcript tab above.


Iman: Today on “Just Transition” we’re headed to the U.S. state of Kentucky. To Eastern Kentucky to be exact. Into the mountains.

Avi: the Appalachian mountain range, which is sort of, you know, shared by West Virginia, Tennessee and the sort of middle of the country.

Iman: It’s one of the most striking and remote corners of the United States.

Avi: super beautiful, rugged mountains, really deep ravines and creeks and rivers sort of cutting through these dramatic cliffs and peaks.

Iman: But it’s also a down-and-out place, economically speaking.

Wes: I mean, it is poverty. I mean, there could be four families living in one household and trying to live on food stamps. And that is what I'm saying, There is a sense of, just throw me a rope of any kind down here and we'll climb up that rope.

Iman: For decades that rope was coal. At its peak, some 50 thousand miners and other workers made a living extracting it. But coal’s fortunes have declined. In Kentucky, 90% of miners have lost their jobs in recent years. And unemployment isn’t the only legacy coal’s left behind.

Nina: Well they have leveled about 25 percent of the mountains and left a lot of what they call slurry ponds, and their remnants of the waste coming out of the old mines.

Iman: Coal deforested some 1.5 million acres in Appalachia. For years Kentucky has been trying to bounce back from the damage, the blight and abandonment. Searching for that next big thing that will create jobs. Attract people.  Help rebuild communities, the environment. But what lawmakers have found – well, it isn’t really a thing at all. You can’t hold it in your hand. It’s an idea. Or, an algorithm. But it can make people very rich.

Today, “From Coal to Crypto: Mining in Appalachia”.


Iman: Welcome to “Just Transition”, a podcast from Thomson Reuters Foundation about the effort to make the planet cleaner and greener.

Clip 1: And recognizing the need for support towards a just transition.

Iman: Without leaving anyone behind.

Clip 2: Just transition, but affecting people and communities.

Iman: I'm your host, Iman Amrani.

This podcast will look at how we are to ensure a just transition, and what's at stake if it's ignored.

Clip 3: There is so much that we can do to keep this from getting worse.

Iman: Avi Asher-Shapiro, get us started here on this odd tale of Kentucky’s bitcoin boom.

Avi: Yeah, sure. So I cover tech for the Thomson Reuters Foundation. And over the summer, I was sort of poking around trying to get into the big bitcoin story. And I came across a sort of strange report from an industry group that showed that the state of Kentucky had sort of quietly become this powerhouse for bitcoin mining. And so I set about trying to understand sort of, first of all, why had that happened? And second of all, what was going on there? Who sort of who is winning, who is losing who were the players involved?

So that took me on a sort of like multi-month journey of investigating that. And finally flying out and sort of taking a bitcoin road trip across the Appalachian Mountains, trying to sort of get to know this industry and why it had sort of taken root in this in this part of the country.

Iman: A rural, mountain range of small, mostly depressed towns.  Where young people tend to finish school and leave. A region scarred by these abandoned mines. And now these virtual mines are popping up. 

Avi: I just showed up in town and started chatting with people and they said, Oh yeah, we know where that is. So we just drove out and took a look at it. And it was kind of in the shadow of an old coal mine. There was this kind of quiet series of little bunkers that were being filled with bitcoin mines. And there was, you know, so it wasn't the kind of thing they were like necessarily trying to advertise or at least show me around. But it was easy to find. I mean. other ones were tucked away on the top of mountains. You would never know they were there. These things are not very big. You could have a twenty five million dollar bitcoin mine that's, you know, easily hidden.

Iman: Bitcoin – just as a reminder – is a cryptocurrency. Virtual money not linked to any central bank or institution. But, Avi, how are bitcoin mined?

Avi: Yeah, so, you know, bitcoin mining is is a bit of a misnomer. You know, there is no mining taking place in the traditional sense. There's nothing being taken out of the ground. The easiest way to understand it is, you know, it's basically a competition between computers. There's a network that maintains the bitcoin network that keeps track of who has what bitcoins and who's given what bitcoins to whom. And the way that that network is, all that those bitcoin transactions are kept track of is, you know, a network of computers all over the world. And the way that those new bitcoins are created is those computers are pitted against each other and super, super complicated computational challenges, basically. So. And then bitcoins are doled out based off of basically, you know, who is who has the most computing power.

Iman: So it's not so much a mine - it's more a room full of thousands of Computers battling each other to solve complex math problems.  

Avi: So if you think about it, these machines that people use to mine bitcoin are like, you know, can cost over $10,000. And they could be like the size of the toaster and someone could have thousands of them plugged into the wall. sucking down, electricity of a small city, right? And that's what a bitcoin mine is. And so then the economics of it become, you know, obviously you have to have the money to buy these machines, which are super expensive. And then, you know, one of the big variable costs is how much are you paying for electricity? How much are you paying for land? How much are you paying in taxes? And then people describe this when you talk to bitcoin miners, they kind of use the terminology of prospecting land. They look for the place in the world where they can sort of keep their electricity costs down. They can keep their taxes down, and they can be able to get stuff going quickly and be able to predict that they'll be able to do business for a long period of time.

Iman: And this is where Kentucky enters our story.

Wes: Obviously, you've heard of the Kentucky Derby. Bourbon. Horses, tobacco, There's a lot of horse farms here in Lexington. We’re known for the large horse sales that we do yearly.

Iman: This is Wes Hamilton, businessman and entrepreneur – and a co-owner of one of the new Bitcoin mines.

Wes: It's been a love affair of technology my whole life, anything new and exciting.

Iman: Around 2016 Wes caught wind of cryptocurrencies. And he hasn’t looked back.

Wes: Once I saw the whole picture and how that bitcoin, in my opinion, will be the next fiat that I knew, right?  [FADES OUT

Iman: Fiat means legal tender. Money. Moolah. But not backed by something concrete, like gold.

Wes: Then I knew right then I drank the Kool-Aid, and it was kind of like, all right I’m off the rabbit hole. And here I go.

Iman: It does make me wonder how much money do you stand to make from this investment that you've made in bitcoin mining?

Wes: It's substantially more than any other business I've ever been involved in, and I'm an entrepreneur. I've been in several. It's my opinion, the way I look at it,  if you don't get involved in it, in five years or three years, you're going to be sitting there thinking, “Wow, I had the opportunity to buy this at this or I had the opportunity to invest some money, and I didn't.”

Iman: It’s hard to pin Wes down when it comes to his profit expectations. But it’s no secret that people are getting rich off of Cryptocurrencies. A big mine can make hundreds of thousands of dollars a month.

Avi: A picture started to come together of a, you know, an effort that was being made in the state by lawmakers to sort of woo the bitcoin industry to that state by offering a package of incentives and cheap power.

Avi: they passed law some laws over last summer that basically said that bitcoin miners don't have to pay their taxes on their electricity bills, which can be quite significant.

Iman: Tax-free energy. Kentucky just happens to have tons of it waiting to be used. And at bargain prices.

Avi: All of the industrial infrastructure has sort of fled the state. There's no mining operations anymore. So next to these old mines are these massive utilities that have built up all of this power infrastructure to fuel an industrial state, which no longer exists. So the bitcoin miners have a lot of leverage. They show up and say, Hey, we'll buy a bunch of power from you, and the utilities have the power to sell and no one else to buy it. So they can drive their costs down pretty low in terms of electricity.

Iman: But at what cost? Will a Kentucky transition from coal to crypto be just? For people who are looking for work? For the local environment? Or even for the planet?

Nina: Well, I think that this is just one of the most evil of evils. That's the way that I look at it. During the time that they were doing mountaintop removal in this area, They were blasting mountains, leveling the whole mountain. We were fighting that.

Iman: Meet Nina McCoy, a local environmental activist. And a retired biology teacher.

Nina: I love the beauty of nature, and I love the amazing things that we can get from nature. But I think we have to do it in a way that is responsibleAnd so what I think is that studying science is a way of studying the mind of God. And in God's world, everything is recycled.

Iman: Nina spent decades fighting coal. But she says if Bitcoin mining takes off, the state is going to owe one big apology to laid-off coal miners.

Nina: Because at least when they were mining, they were doing it so that people could have heat so that they could have electricity. But this is strictly for people to make money. And it takes so much energy, so much of the energy that we all try to conserve so that we don't pollute the environment too much. I think it is evil.

Iman: Evil, she says, because much of the investment, and future profits, are in the hands of outside entrepreneurs and far-away investment funds. But Nina is mainly opposed because Bitcoin mining needs huge amounts of energy to keep all those computers computing. So much energy, in fact, that China recently banned bitcoin mining. At least one U.S. state is considering the same. New York. But others, like Kentucky, have opened their doors wide. 

Iman: So where is that electricity coming from? Answer: from local coal. And natural gas. A new study published in the journal Joule suggests Kentucky produces more carbon from cryptocurrency mining than any other U.S. state. It calculates the state's Co2 footprint to be the equivalent of the exhaust from 650,000 cars. At least one mine – Wes Hamilton’s – claims its juice will come from a renewable source. A carbon-neutral municipal waste plant. But even that is subject to fierce debate. And Wes acknowledges his mine is the only one even aiming for carbon neutrality. But he has some novel ideas for recycling some bitcoin emissions. And he says all mines could follow suit.

Wes: We have one point nine million acres of abandoned mine structure underground. So we're wanting to utilize the heat that comes off our bitcoin farming and pump that back underground to these coal mines that are just empty cavities. And we're able to do agriculture under coal mines

Iman: When you say, agriculture under a mine? I'm sorry. I'm, you know, I'm not totally aware of how that works.

Wes: Imagine a cave structure that's let's take the best one nine foot tall by 20 foot wide, and it goes on for 20 miles and it's just open. So you could basically with grow lamps and agriculture, you could grow, you know, like a large greenhouse. Almost.

Iman: Wes says he thinks Bitcoin will bring the boom times back to Appalachia.

Wes: I have a passion of creating jobs and turning eastern Kentucky, one of the most impoverished areas in the United States of America. I'm not really concerned. Obviously, if my family's taken care of, I don't need a jet. I don't need all this stuff. But if I can create jobs in eastern Kentucky to replace what was taken in the coalfields, that's my greatest accomplishment. You know, if I can, if I can create 5000 jobs, that's what I want.

Iman: Do you believe you can create 5000 jobs with this?

Wes: Oh, absolutely.

Iman: And what would those jobs be?

Wes: Manufacturing, repair. I mean, think about this - next year they're predicting that the semiconductors are going to be a shortage. And what's going to happen then? you have to have these massive repair centers, to keep what machines are in the environment up and going. So, you know, there's enormous amounts of repair. And not only that, but people want to buy containers, so they're wanting to deploy these things in a fast mobile way. And the manufacture of containers is enormous.

Iman: So far, the numbers are decidedly more modest. Wes says his mine has 32 employees. Avi Asher-Schapiro says many Eastern Kentuckians are skeptical about the claims of thousands of new jobs.

Avi: These mines just don't employ many people. like the average coal mine in Kentucky would employ, like 6000 people. I think per mine, for example, you know, one of these bitcoin mines, might be plopped down on the top of the coal mine and employ a dozen people. Right. So, you know, it's not in terms of the intensity of the job creation. You're just you're in a completely different universe when you're talking about the history of a state that had a dense industrial base.

Iman: And this gets to what really rankles some people. You have an industry coming in, gobbling up dirty energy, creating just a handful of jobs, moving profits out of state. And on top of that, the mines are getting tax breaks. Breaks that regular business owners don’t get.

Avi: So we've seen this with other kinds of major capital intensive investments in the United States where you have these competitions that different municipalities hold to host a stadium, for example, and the there's a race to the bottom, like how many taxes can we give them? How many tax cuts can we give them? How many incentives can we give them to open the stadium in our town? So in that sense, I think we're seeing some of the early percolations of that kind of dynamic with bitcoin mining. Because yeah, when I talk to bitcoin miners and especially lawyers who help them sort of tax people help them suss out their options. I mean, this is what's going on. different states are trying to be as welcoming as possible to this industry. So these decisions end up not necessarily being about the economic benefits to the community, but maybe about the interests of different politicians. And you know, we did see I did see the beginnings of those kinds of dynamics develop in Kentucky, where Senator Brandon Smith, who is the head of the Natural Resources Committee in the Kentucky Legislature and who is the author of a number of the bitcoin legislation that give incentives to relocate the state, also owns his own bitcoin mine.

Iman: I just wanted to clarify that state senator Brandon Smith is also involved in bitcoin miningIs he involved in in your bitcoin mining specifically?

Wes: He is, yes.

Iman: Or, he was. Smith sold his interest in the mine in February. But prior to that, the senator, who was head of  Kentucky's Natural Resources Committee, pushed legislation making it easier for bitcoin farms to operate.

Iman: OK, and just looking at it from the perspective I'm coming from with fresh eyes. It is an interesting one to see the politicians who kind of pass through legislation and things like that are so involved in, I guess, operations that stand to make quite a lot of money. Do you see how that might make people feel uncomfortable? Do you think it's not a cause for concern?

Wes: That's a that's a very good question.

But his initial process was trying to create jobs. It's not that myself or Senator Smith is looking to become wealthy.

Iman: Smith said owning his own bitcoin operation did not run afoul of any state ethics rules, and that he got involved in the industry to "put my money where my mouth was" as he pitched the state as a hub for investors. And despite Wes' assertion that he's not in this to get rich, there is a modern-day ‘gold rush’ underway

Avi: There is a competition within the bitcoin mining industry for a limited number of places that this is profitable. So a number of bitcoin miners I spoke to were saying like, these guys stole my site. I was trying to buy this land. But then these other guys, like, bought it, you know, out from under me. So there is a bit of that element going on like, you know, people are not trying to show their hands, you know, because basically, you want to buy a site that's right near a bunch of power infrastructure, you know, so you want to. There's like a substation or transformers right nearby, so there you can just immediately plug in all the machines into the wall and you don't have to build any stuff.

Iman: It’s early days, and heady days, in Appalachia. Few people are protesting Bitcoin’s arrival, They seem to be taking more of a wait-and-see approach. Even if bitcoin is creating divisions.

Avi: I understand why. If you can print your own money in bitcoin on a mountaintop in Appalachia and you believe that bitcoin is an emancipatory technology that is going to free humanity from the fiat system of currency, which you think is deeply damaging that you would see what you're doing there as a totally principled and ethical investment, which is how these companies defend what they're doing. But I can also completely understand why someone who is living there and has a skeptical eye to outside money into extraction of their resources could see this and say, “Hey, this is just like the coal industry, but with less jobs. like these are just outsiders using the fact that we have this, you know, specific situation with our electricity and with our laws to come in, take a bunch of money and leave.” It's someone else's job to decide if they think that cryptocurrencies are dystopian or if they're emancipatory. For me, I'm more interested in sort of the human element of what this means in this part of the country.

Iman: What's the silver lining?

Avi: Something positive... I mean, I think on a personal note, I could say that I found everyone that I met with on my reporting trip to be, you know, incredibly warm and thoughtful and committed to making their communities a better place. You know, I don't feel comfortable saying there's any particular silver lining in the growth of bitcoin mining in Appalachia. I think that only time will tell if this is, a dream, a nightmare or a total nothing. You know, and it could be any of those things. So I guess the silver lining for me is that it seemed like people were doing the work to educate themselves, to learn about this, to get organized and start talking about if they wanted this in their communities. And hopefully they will be able to assert that kind of sovereignty that that they deserve.

Iman: Hope in the people. I will take that as a silver lining. I will take that. Thank you, Avi.

The Kentucky legislature has also passed a law to let people cash out bitcoins in banks to turn them into dollars. That might mean more wealth sticking around Appalachia itself. Perhaps moving Eastern Kentucky in the direction of a just transition, however slightly. For a region so economically depressed, even a small nudge could make a difference. Though for now this is all speculative. Like Bitcoin itself. You can read Avi Asher-Shapiro’s story on bitcoin in Appalachia on the Thomson Reuters Foundation website - the link’s in the show notes.

This episode was produced by Leo Hornak.

Our associate producers are Abhi Raheja and Paula Sant’Anna.

Sound design by Reza Dahya.

Legal help from Melissa Tesla and Murshed Anwar.

Our executive producer is Kathleen Goldhar.

The president of Antica productions is Stuart Coxe.

Our Context team includes Just Transition Editor Megan Rowling, and Editor-in-Chief Yasir Khan.

The CEO of the Thomson Reuters Foundation is Antonio Zappulla.