Kentucky’s Bitcoin Boom Has Gone Bust

Kentucky’s once-promising bitcoin mining industry has hit hard times, leaving local communities seeking new economic opportunities in AI-powered data centers. Despite the setbacks, there’s a glimmer of hope that both bitcoin mining and AI could revitalize the region, though skepticism remains due to past industrial promises.

• Bitcoin mining in Kentucky has declined significantly.
• AI data centers are seen as potential economic saviors.
• Local skepticism and past environmental issues cloud the optimism.
• Kentucky lawmakers have passed legislation to support digital asset use.

In 2021, Kentucky was a powerhouse in the US bitcoin mining scene, contributing about one-fifth of the nation’s computing power for mining. The state transformed its old coal mine infrastructure into the backbone of a digital currency revolution. But like a crypto crash, the boom was short-lived, leaving behind deserted mining operations and a community with dashed hopes.

The lack of transparency and light regulations made it hard for locals to track the number of active crypto mines. Stories of fly-by-night miners, who promised investments and jobs only to vanish after a few billing cycles, became all too common. Even projects with local backing, like Mohawk Energy’s initiative in Jenkins, Kentucky, faced legal disputes and failed to deliver on job promises, leaving the community disillusioned.

Despite the downturn in bitcoin mining, there’s cautious optimism about AI-powered data centers stepping in to fill the economic void. These facilities need flat land, ample power, fiber connectivity, and a skilled workforce—attributes that Kentucky, with its coal mining legacy and welders, is well-equipped to provide. The potential for these centers to bring lasting jobs and infrastructure has sparked interest among economic developers and locals, though skepticism lingers due to past economic disappointments.

Kentucky lawmakers, in an effort to bolster the digital economy, passed a “Bitcoin Rights” bill in March 2025. This legislation, officially known as House Bill 701, aims to protect the right to use digital assets and support digital extraction within the state. While it’s unclear if this will reignite the crypto mining scene, it could pave the way for miners to pivot to AI, offering a new chapter for the state’s economic story.

The transition from traditional industries to the digital economy is fraught with challenges and opportunities. While the allure of quick crypto profits has faded, the potential of AI to bring sustainable growth and job opportunities offers a new hope for Kentucky’s communities. However, the scars of past economic cycles and environmental issues remind us that any new venture must prioritize long-term community benefits and environmental responsibility.

The potential environmental impact of AI data centers, with their high energy and water demands, adds another layer of complexity. Kentucky’s history with incidents like the 2000 coal slurry spill has left residents wary of new industries that might strain local resources. Balancing economic growth with environmental responsibility will be crucial to winning over the community.

Local voices offer valuable insights into this transition. Anna Whites, a lawyer representing crypto mining clients, shared the challenges:

“They’d constructed on someone else’s land, or they would be paying a host company to provide the physical plant… So they’d pay the down payment or they would convince the landowner to pay the down payment, and then they would mine the first three months and then they’d go into the next billing set cycle, go almost to the end of it and then disappear.”

Nina McCoy, a former high school biology teacher, voiced the community’s skepticism:

“We’ve allowed these people to be called job creators… And I don’t care if it’s AI or crypto or whatever, we bow down to them and let them tell us what they are going to do to our community because they are job creators. They’re not job creators, they’re profit makers.”

On the other hand, local entrepreneur Wes Hamilton sees a brighter future with AI:

“AI is in everything that we do… Bitcoin is a one-trick pony. You create it. The only person that gets paid is the owner of the machines.”

As Kentucky navigates its economic future, the path forward is challenging yet full of potential. Whether AI data centers can truly revitalize the region remains to be seen, but one thing is clear: the community’s trust and the environment’s well-being must be at the forefront of any new development. Is Kentucky just jumping from one speculative bubble to another, or is AI the real deal?

Key Takeaways and Questions

• What was the peak contribution of Kentucky to US bitcoin mining?

  At its peak in 2021, Kentucky accounted for about 20% of the collective computing power dedicated to proof-of-work cryptocurrency mining in the US. Proof-of-work is the method by which bitcoin transactions are verified and new bitcoins are created.

• What happened to the Mohawk Energy project in Jenkins, Kentucky?

  The Mohawk Energy project, co-founded by Kentucky Senator Brandon Smith, promised to employ retired coal miners and disabled veterans but faced legal disputes and job losses, failing to deliver on its promises.

• How are AI data centers viewed as a potential economic solution in Kentucky?

  AI data centers are seen as potential economic drivers due to Kentucky’s existing infrastructure and skilled workforce, particularly welders, which are in high demand for these facilities.

• What legislative action has Kentucky taken to support digital assets?

  Kentucky passed a “Bitcoin Rights” bill, House Bill 701, in March 2025 to enshrine the right to use digital assets, signaling support for digital extraction and the broader digital economy.

• Why are some Kentucky residents skeptical about new industrial ventures?

  Past experiences with economic booms and busts, coupled with environmental incidents like the 2000 coal slurry spill, have left residents wary of promises from new industries, including AI data centers.

• What are the environmental concerns associated with AI data centers?

  AI data centers consume significant amounts of energy and water, raising concerns about their impact on local resources and the environment, especially given past issues with industrial runoff.