Magnets, Minerals, and Bitcoin: A Real Plan to Blunt China's Rare Earth Edge

What China actually controls

People love to say China controls rare earths. That is not quite right. What China really controls are the chokepoints that matter: separation, metallization, alloying, and magnets. Mining is the loud part. Processing is the leverage.

Here is the shape of it. You dig ore, crack it, separate a messy cocktail of elements into clean oxides, reduce oxides to metals, turn metals into alloys, press and sinter magnets, then coat and machine them. The guidance fins on a missile do not care that you have a warehouse of ore. They care that you have high coercivity NdFeB magnets that survive heat and stress. That last mile is where dependence bites.

The number everyone circles is magnets. EV drivetrains, offshore wind turbines, precision actuators, and a depressing amount of defense hardware hinge on them. You want resilience. You do not get it by waving at a hole in the ground. You get it by standing up the boring, capital hungry, chemistry heavy middle.

The U.S. route out: mine to magnet, not mine to hope

If you want to break a chokepoint, you either route around it or you build your own. The United States is finally choosing the second option in a way that looks like it might stick.

The right model is not a one year grant and a ribbon cutting. The right model is price floors, 10 year offtakes, and a full stack from ore to magnet. The recent government partnership with a major U.S. producer finally acknowledges the game theory here. China can dump prices long enough to starve non Chinese projects, then raise them once you pull out your rebar. The antidote is to pre commit to buy at a floor and to take delivery for a decade. It backstops the capex and neuters the dump and squeeze. Unsexy, but it works.

Do the same with a second U.S. magnet line so everything is not single threaded. Get heavy rare earth separation online in the States for dysprosium and terbium, which are the salt and pepper that keep magnets from wilting at high temperature. Treat magnets like LNG export terminals in reverse. Two or three big facilities, locked contracts, public money used to anchor the risk, private money to scale.

If that sounds like industrial policy, congratulations. It is. The point is not ideology. The point is magnets.

The urban mine is real if you pay for it

We love new mines. We ignore the machines already sitting on our desks and in our garages. Hard drives, motors, turbines, drones, appliances. There are magnets in all of it, and unlike a mountain, your old server rack is already above ground.

The bottleneck today is not physics. It is logistics and incentive. If you want volume, you have to pull together a million tiny streams into one steady river. That means deterministic buyers, clean pricing, and an intake process that survives contact with reality. I like two moves here:

1. Anchor customers who will pay for recycled content. The brand value is real. If a top tier electronics company commits to 100 percent recycled rare earth content in certain product lines and signs multi year purchase agreements, recycling stops being a lab tour and turns into a business. The producer can finance expansions against that paper.

2. Pay bounties for the scrap you actually want. Not all scrap is equal. You care about pre sorted magnet bearing material and high volume flows like data center drive sleds and EV motors. That is where a bounty market makes sense, and that is where Bitcoin starts to matter. More on that in a minute.

Recycling will not replace mining in the short term. It does not have to. If it shaves 10 to 20 percent of primary demand and supplies a counter cyclical feedstock when the market whiplashes, it already did its job.

Use less rare earth in the first place

A lot of this problem can be attacked from the other side: design. You do not have to staple the same magnet recipe into every motor. Car makers are already proving it.

Excited synchronous and wound rotor motors dodge permanent magnets entirely. They are bulkier and may not be perfect for every drivetrain, but they delete NdPr and Dy from the bill of materials. On the permanent magnet side, grain boundary diffusion and smarter microstructures can slash dysprosium and terbium intensity while keeping coercivity high where you actually need it. You can also swap in more abundant elements in non critical zones to reduce Nd content without kneecapping performance.

None of that makes magnets obsolete. It just takes the pressure off the scarcest parts of the stack, which lowers the surface area of the problem. Engineering is a policy tool here. Treat it like one.

Policy that probably helps

Three levers matter more than the rest.

First, a credit that recognizes critical mineral processing as real manufacturing. The 45X style production credit puts cash back into plants that turn oxides into metals, metals into alloy, and alloy into magnet. Transferability makes it financeable for early stage outfits that are not yet profitable. If people try to sunset this while we are still rebuilding the base, expect a stall.

Second, permitting with clocks on the wall. FAST 41 gives you a real timeline with accountability and a dashboard. Use it for mining, yes, but especially for separation and magnets. These facilities have a far smaller environmental footprint than a new open pit, and they are the thing you actually depend on.

Third, stockpiles that are not just oxide. Stockpile metal, alloy, and magnet blanks. Stockpile the Dy and Tb that are truly scarce. Publish inventories on a reliable cadence so the market cannot be gamed by rumor.

The asteroid mining question

I like space. I also like math. If your plan to fix a 2020s supply chain bottleneck relies on shipping rocks from space to sell into commodity markets on Earth, you are writing fan fiction.

The legal groundwork exists. The United States and Luxembourg both recognize private ownership of extracted space resources. That is good to have. But the economics of returning bulk metals to Earth do not clear for rare earths. The targets that look remotely attractive are platinum group focused or water for propellant. And the first place asteroid mining pays is in space, not at a port in Los Angeles. If asteroid mining happens at scale, it will likely feed orbit and cislunar construction before it ever ships a kilogram of neodymium down the gravity well.

This does not mean ignore it. It means mark it as post 2035 optionality and keep the legal and standards work moving while we learn from missions like Psyche. Meanwhile, do the boring terrestrial work that actually gets you magnets in the next five years.

The Bitcoin angle

As usual, I'm seeing the solution through the lense of Bitcoin. Bitcoin does not produce atoms. It can make the energy economics for producing atoms less fragile. That starts with how Bitcoin miners behave on modern grids.

Large mining operations are basically data centers that can turn off quickly without losing state. In places like Texas they register as large flexible loads that curtail when prices spike or when the grid operator calls for relief. They also settle instantly, which matters when you are juggling power contracts and thin margins.

Here is the move. Co locate a miner with a separation or metallization plant in a region with big wind and solar swings. Build or contract a slice of generation behind the meter and tie into the grid. The miner soaks up cheap hours and drops to zero the second the plant needs the capacity or the grid tightens. The plant gets a lower all in cost of power over the year and a partner who monetizes volatility instead of punishing it. During emergencies the curtailment order is hard coded. The industrial process takes priority. The miner is the first to blink.

You can stack more on top.

You can finance part of the project with BTC settled offtake or bonds, tapping global pools of capital that want Bitcoin exposure tied to real assets with cash flows. You can write price floor contracts that function like the recent magnet deal, denominated in dollars or in BTC. You can run a national bounty system for magnet scrap where the payout is a small, instant Bitcoin transfer to the person or shop that turns in the right feedstock to a verified processor. No wire transfers. No net 60. No friction that kills participation at the edges.

There is also the flare gas angle. Early stage sites with access to stranded gas can run generators at higher combustion efficiency than open flares and mine off grid while they commission. If that gets you through a brutal first year on cash flow, it is not a moral failure. It is a bridge.

None of this requires religious belief. It requires curtailment contracts, telemetry, and a thoughtful interconnect. The miner must always be the secondary citizen on the campus. If you violate that rule, you deserve the headlines that follow.

A sequence that works

If I had to write the plan on one page for the next decade, it would look like this.

Months 0 to 24. Finish the first full mine to magnet chain in the U.S. Move real volumes. Stand up a second magnet line and a domestic heavy rare earth separation cell so Dy and Tb are not an Achilles heel. Lock in offtakes with a mix of defense and commercial buyers so the plants are not exposed to whipsaw pricing. Start a Bitcoin co located pilot at a refinery or metallization facility to prove out the flexible load economics with public telemetry. Begin stockpiling magnet blanks and heavy rare earth metals, not just oxides.

Years 2 to 5. Scale recycling from hard drives and EV motors with bounties and pre arranged buyers. Target a double digit percentage of domestic magnet content from recycled feedstock. Deepen demand side engineering across EV and wind portfolios. Use the production credit aggressively while pushing permitting clocks on every new midstream plant. Keep two domestic magnet lines healthy so no single point of failure exists.

Years 5 to 10. Keep investing in magnet microstructures that thrift heavy rare earths. Diversify allied feedstock, especially for heavies. Maintain price floors and stockpiles as long as China can still run a price war. Continue to treat asteroid mining as a research track and a legal standards project, not as your supply plan.

Is that flashy. No. Does it work. Yes.

Risks you should expect

There are three ways this goes sideways.

Price war. China undercuts non Chinese capacity to drive losses, then repeats 2010 with a new cast. The antidote is the boring one I keep repeating. Ten year offtakes with price floors and a government backstop that lets plants run through valleys without shutting doors.

Permitting drift. If you let midstream plants get trapped in a three year maze, the capital will go do something else. Use FAST 41 and copy paste environmental health and safety templates across facilities so the review is about site specifics, not rewriting the Bible every time.

Single supplier risk. If you only stand up one domestic magnet line, you did not build resilience. You built a new dependency. Two lines minimum. A third in an allied country. Recycling as a steady trickle that gets bigger every year.

The asteroid mining afterthought

Just because I parked asteroid mining outside the 2030s plan does not mean it has no role. The role is learning. Build the legal scaffolding. Sort out property rights. Figure out how we certify and trace in space. Push in situ resource utilization for propellant. Prove rendezvous, operations, and materials handling at small bodies. When the day comes, you will not be stuck arguing philosophy. You will be ordering parts.

If you are desperate for a near term space angle, anchor a few defense and science missions to buy components from domestic magnet lines. Space is small volume and high value. It is a perfect early customer for boutique grades while the factories ramp automotive volumes.

The move forward

This is not complicated. It is hard, but not complicated. China owns the chokepoints that matter because it built the middle. The way out is to build our own middle and to make it uneconomic for anyone to starve it with short term price games. That means magnets, not press releases.

Recycling is an urban mine you can turn on with the right price signals and guaranteed buyers. Demand side engineering trims the rarest elements out of the system. Policy should be a ramp, not ankle weights. Asteroid mining will be cool one day, but your EV motor is not getting its magnets from space any time soon.

And Bitcoin. It will not conjure terbium out of thin air. It will take real volatility in power markets and convert it into cash flow you can bank against, right next to the plant that turns powder into magnets. It can pay the backyard salvager for a bucket of the right scrap in 2 seconds with no middleman. It can settle an offtake with finality, across borders, with no one asking for permission.

That is what a real plan looks like. Less romance, more magnets. Less announcement, more alloy. If we do that for five straight years, the edge blunts. If we keep tweeting about asteroids while importing the same magnets from the same places, the edge cuts.

Your move, America.