Long Valley Caldera hosts an active hydrothermal system that includes hot springs, fumaroles (steam vents), and mineral deposits. Hot springs exist primarily in the eastern half of the caldera where land-surface elevations are relatively low; fumaroles exist primarily in the western half where elevations are higher. Mineral deposits from thermal activity are found on the an uplifted aread called the resurgent dome, at Little Hot Creek springs, Hot Creek Gorge, and other locations in the south and east moats of the caldera.

Hot springs discharge primarily in Hot Creek Gorge, along Little Hot Creek, and in the Alkalai Lakes area. The largest springs are in Hot Creek Gorge where about 250 liters per second of thermal water discharge and account for about 80% of the total thermal water discharge in the caldera. At the other extreme are springs at Hot Creek Fish Hatchery which contain a small component (2-5%) of thermal water that raises water temperatures about 5°C higher than background temperatures. Use of the warm spring water in the hatchery has increased fish production because trout growth-rates are faster in the warm water than in ambient stream temperatures in Long Valley.

In hydrothermal systems the circulation of ground-water is driven by a combination of topography and heat sources. In Long Valley Caldera, the system is recharged primarily from snow-melt in the highlands around the western and southern rims of the caldera. The meteoric water infiltrates to depths of a few kilometers where it is heated to at least 220°C by hot rock near geologically young intrusions. Upflow occurs in the west moat where the heated water with lower density rises along steeply inclined fractures to depths of 1-2 km. This hydrothermal fluid flows laterally, down the hydraulic gradient, from the west to the southeast around the resurgent dome and then eastward to discharge points along Hot Creek and around Crowley Lake. Reservoir temperatures in the volcanic fill decline from 220°C near the Inyo Craters to 50°C near Crowley Lake due to a combination of heat loss and mixing with cold water.

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