in the mountains of Sichuan in China.

(speaking in foreign language)

- [Narrator] And its rival

is on the other side of the planet

at a former factory

that used to make denim for Levi's.

- You see the transformers lined up on the outside.

We have a lot of megawatts.

- These two miners make money

by providing the massive computing power

that's required to process

and record a high volume of cryptocurrency transactions.

Business was soaring as Bitcoin hit new highs in early 2021.

- It's hard to sleep.

You go to bed at night and you wake up and you look

and you go, "Holy crap, it's still up.

- [Narrator] Last year, China controlled 70%

of the global processing power

that runs the Bitcoin network

and that means the majority

of the cryptocurrency's global transactions

are routed through these computers in China

and recorded by miners here.

So a group of US miners is raising hundreds

of millions of dollars to win a larger share

of Bitcoin's processing power.

- When capitalism in the States decides it wants

to get into market, get into an industry,

it moves heavy capital there.

- [Narrator] They say their work is also meant

to protect Bitcoin.

Industry insiders say the Chinese government

has already cracked down on some crypto entrepreneurs

and could potentially disrupt global trading

by asking miners in China

to block certain users from making transactions.

- It's better for cryptocurrency to be spread

around the globe.

So that Bitcoin cannot be manipulated

by any single government.

- I think there will be competition.

There's more and more human resources,

technology resources that we're putting

into this particular new segment.

- [Narrator] The battle over Bitcoin mining

will decide who controls the infrastructure

that powers the cryptocurrency.

(speaking in foreign language)

- [Narrator] Yulong Liu started mining

during the previous Bitcoin rally in 2017.

And this is one of the sites he works with

that has mined about 8,000 Bitcoins

over the past three years,

generating about $28 million in revenue

over that time period.

(speaking in foreign language)

- [Narrator] Miners need cheap electricity,

which is abundant in some parts of China thanks

to dams and coal power plants

that were built by the state in the past decade.

That electricity then powers fast machines

that are necessary to solve mathematical problems

in order to eventually mint new coins.

China is home to the vast majority

of mining equipment production

and so miners like Liu always have speedy access

to the best technology,

like this cooling system.

(speaking in foreign language)

- [Narrator] But the industry in China lives

with uncertainty.

Liu asked to keep the location

of the site a secret because he says he's not sure

if the government will crack down one day.

While mining itself isn't illegal,

virtual currency trading

and crypto exchanges are banned in China

because they're seen as risky

to the country's financial system.

In the past few months,

Bitcoin industry insiders have said

that Beijing accused some Chinese miners

of money laundering

and froze their credit cards,

making it difficult for miners to pay operating costs.

The Chinese government did not respond

to a request for comment.

So to help miners develop their business

despite the risks,

Liu offers loans so miners don't need

to go through Chinese banks.

His company Babel Finance lends cryptocurrencies

to about 300 miners,

including the owners of this site.

- So that they can purchase more equipment

at a lower cost

and then maintaining the machine itself,

including repairs.

- [Narrator] And Chinese miners

are now facing growing competition from overseas.

- In the United States,

we have massive infrastructure,

power infrastructure and building infrastructure

that's already been built out

and we can convert facilities

into large data mining facilities.

- [Narrator] Russell Cann is an American miner

who scouts the US for abandoned factories

and converts them into mining facilities.

His goal?

Raise cash to develop industrial-scale mining

in the US where until a few years ago,

most miners ran small DIY operations.

- [Xander] This is my housing for my computers

so that the heat is vented outside.

- [Narrator] So Core Scientific

has built a team with former executives

from Microsoft and Myspace

and put together an ambitious business plan.

- We have Ernst & Young audit the financials.

We have a strong balance sheet.

We check a lot of boxes for institutional investors

that a Chinese miner does not check.

- [Narrator] The strategy worked.

In the past two years,

the company has raised $95 million

and secured a $20 million loan

to install mining rigs in facilities

including a former denim factory in North Carolina

and a former carpet factory in Georgia.

Core Scientific's power infrastructure

can handle the latest mining equipment,

which Cann says usually consumes approximately

100 megawatt hours of electricity to mine one Bitcoin.

That's the same amount of electricity used

to watch television continuously for about 98 years.

And tunnels that were once used

to cool the factory are now being used

to keep chips from overheating.

- We've got the ability

to process 200,000 gallons of chilled water

through these pipes to keep the temperature

in the building down.

- [Narrator] Cann hopes all this will help him offset

a long-running technological disadvantage.

He was usually about four months behind his Chinese rivals

when it came to accessing the latest rigs

and the price tag was sometimes 50% more expensive.

Others are using the same playbook as Cann,

creating corporations that attract the support

of institutional investors

who then help fund high-tech mining sites.

Industry insiders and academics

who study mining say

that the US efforts can be good for the future

of the cryptocurrency

because the original goal of Bitcoin

was to create a currency

that couldn't be controlled by one entity.

- The dream was that we would reimagine finance

without gatekeepers and what did we get

after 11 years?

We got different kind of intermediaries.

Now mostly nameless, mostly under the covers in China.

- [Narrator] Emin Gun Sirer runs a blockchain startup

and is also an associate professor

at Cornell University.

He studies the vulnerabilities of cryptocurrencies

and says Beijing might intervene in the market.

- [Emin] This is an enormous issue.

These miners, they could receive injunctions

that compels them to act in a certain way.

- [Narrator] One request he says

could be to ask miners to exclude certain people

who want to spend or accept Bitcoins in the network,

essentially blocking transactions.

This is what Bitcoin academics call censorship,

similar to how content and accounts

can be blocked on social media platforms in China.

- The Chinese government would say

that the money at certain addresses

must not move and it compels the Chinese miners

to not include certain transactions

so they can selectively sensor certain users

of a blockchain.

- [Narrator] The Chinese government did not respond

to a request for comment.

Babel Finance says if miners in China

are asked by the government to intervene in the network,

they would have to comply.

But that would slow down their operations

and eventually diminish their global processing power.

But US miners aren't immune to facing scrutiny

from financial regulators at home

that have proposed plans

to hold the industry to the same standards followed

by traditional financial institutions.

The more immediate resistance

to US miners could come from local communities concerned

about the environmental impact of Bitcoin mining.

- Bitcoin mining consumes enormous amounts

of energy so all energy that goes to miners

is energy that's being directed away

from other more useful uses.

- [Narrator] Cann says nearly half of the electricity used

by Core Scientific comes from carbon-free sources.

Because China's miners aren't part

of a corporate structure like in the US,

Liu says that they can operate faster

and spend less on operating costs.

- If you multiply the operational costs,

China still has the advantage.

China will be on the front of the curve into the future.

- 2021's all about expansion

and we've built infrastructure,

we've built the software, we've built the team

to be a long-term player in this market.

(upbeat music)