They reside wherever electricity is cheap to power the computers that "mine" the bitcoins or the crypto currency du jour. That's also where the "rarity" argument falls apart. Every Joe, Jane and Harry can make up their own crypto currency if they have sufficient mathematical and programming knowledge. I for example are heavily invested in crypto tulip bulbs.

While the blockchain algorithm is solid, holding a crypto currency is just not a good idea:
- other entities will create their own crypto currency which invalidates the rarity. And yes, my crypto currency is better than yours.
- exchanges get closed, hacked or looted by the operator
- the government knows when you transact crypto currency and they might not like it and/or tax you.
- if the power or internet goes out so does your crypto currency. In Miami we had a little bit of wind and the power went out for an entire week.
As I said, crypto tulip bulbs.

I added to my position in tulip bulbs. Should be sittin' pretty this coming spring