Louisiana has long been a leading state in energy production. Our state is blessed with the energy resources that power portions of the United States and the rest of the world. While the oil and gas industry is used to power homes, cars, and other aspects of everyday life, they can also be channeled into energizing the growing Bitcoin mining industry. Louisiana can become a hub of not only oil and gas but of new and innovative industries by fostering partnerships in the Pelican State.
Bitcoins are the most widely known and valuable cryptocurrency with an estimated 46 million Americans owning some portion of a Bitcoin. Bitcoins are created through a process known as mining. When Bitcoins transfer from one person to another, it's recorded on a digital ledger that requires computing power to facilitate. The computer that lends its computing power to record the transaction is rewarded with a small amount of Bitcoin. As the number of Bitcoins is capped at 21 million, the race to mine the remaining Bitcoins is on, especially as the price remains over $50,000.
Bitcoin mining requires two major components. One is computing power for which Bitcoin miners build specialty purpose computers to generate. The other component is electricity. Since the process of mining can be energy intensive, the price of energy can dramatically affect the profitability of mining across the world.
This is where Louisiana has an advantage over every other state in the nation. A recent report from the U.S. Energy Information Administration shows that Louisiana has the lowest average retail price for energy per kilowatt-hour (kWh) at 7.51 cents. This is more than three cents per kWh below the national average. Furthermore, Louisiana energy producers often have a lot of stranded energy assets such as natural gas that they literally dispose of by lighting on fire.
This energy could instead be productively used by partnering with Bitcoin mining companies. Through these partnerships, a new industry would be grown in Louisiana which in turn would bring more jobs for Louisianans. Also, wasted energy resources would instead be used in a productive way that betters the state economy.
Now would be the most opportune time for Louisiana to utilize its advantages in mining Bitcoin. China, which previously hosted a large amount of mining activity, recently banned all activities related to Bitcoin. As a result, mining in China has essentially plummeted to 0 while mining in the United States has jumped to nearly 40% of all mining activity.
But American Bitcoin mining is not spread across the United States equally. States like New York, Kentucky, Georgia and Texas have been leading the way thanks to lower energy costs and access to low carbon energy. Given Louisiana’s natural advantages, why has the state not become a hub for mining activity?
One reason is simply because political leaders have failed to make Bitcoin mining a priority. In Texas, Gov. Greg Abbott hosted meetings with Bitcoin mining associations on how miners can move their operations to Texas. Texan political leaders believe that Bitcoin mining will not only create jobs, but strengthen the state’s electrical grid and help prevent outages from occurring like they did last winter.
Political leaders in Louisiana should follow the leads of other states. It may only take a visionary political leader to meet with and sell Bitcoin enthusiasts on the potential of inexpensive and abundant energy to open the floodgates for a new industry to set up shop in Louisiana. It’s time for Louisiana to embrace innovative new industries like Bitcoin. The marriage of Louisiana’s natural resources and a new innovative industry can put Louisiana’s economy on a new path to prosperity.
Eric Peterson is the director of the Pelican Center for Technology and Innovation