Decentralization Under Energy Growth: Geographic Reallocation and Convergence in Bitcoin Mining

Abstract

Understanding how Bitcoin mining is distributed across countries is important for evaluating both the sustainability and resilience of the network. In this study, we examine the evolution of total Bitcoin electricity consumption alongside the geographic distribution of Bitcoin mining. Data are provided by the Cambridge Centre for Alternative Finance (Licensed under CC BY–NC–SA 4.0): Annual data from the Cambridge Bitcoin Electricity Consumption Index (2010–2025) and a monthly panel of country-level Bitcoin hashrate shares for 105 countries (September 2019–January 2022). To assess the degree of decentralization in the global mining network, we employ entropy-based measures, inequality indices, and panel convergence tests. The results indicate that total electricity consumption grew exponentially during the early years of Bitcoin, but later transitioned to a more stable and approximately linear path. Country-level permutation entropy reveals highly volatile and dynamic mining trajectories. The Theil index shows that cross-sectional inequality declines over time, while increasing symbolic entropy reflects a progressively more even cross-country distribution of mining activity. Further evidence from σ-convergence supports a statistically significant reduction in cross-country dispersion of mining shares. Dynamic panel fixed-effects estimates reveal mean-reverting behavior in relative country shares, consistent with stochastic convergence. Finally, Phillips–Sul analysis points to heterogeneous early transition paths but ultimately supports convergence toward a single global club. The gradual geographical decentralization occurs alongside persistent core–periphery asymmetries in long-run mining shares. Overall, our findings suggest that Bitcoin mining behaves as a globally integrated industry in which computational capacity reallocates rapidly across countries in response to economic and regulatory conditions.