What Drives Crypto Mining? Evidence from Hardware Imports

Understanding financial activity beyond traditional regulatory frameworks is essential for policymakers. Yet cryptocurrency mining—which offers a direct entry point into the crypto ecosystem without relying on traditional financial intermediaries—remains highly opaque. We propose a novel measurement approach using detailed customs data that tracks exports of crypto mining hardware from the world’s dominant producers. This trade-based proxy allows us to analyze the global distribution of mining hardware imports and identify their key drivers, guided by a stylized model. Empirically, mining surges respond strongly to global factors such as cryptocurrency prices and hardware costs, while domestic factors—including electricity prices and ambient temperature—shape the cross-country distribution of activity. Our findings highlight how global crypto markets, natural endowments, and policy choices jointly influence mining incentives, offering valuable insights for policymakers concerned with financial stability risks and energy subsidy misuse.