Louisiana has long been a leading state in power generation. Our state is gifted with the energy resources that power parts 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 daily life, it can also be used to power the growing bitcoin mining industry. Louisiana can become a hub for not only oil and gas but new and innovative industries by promoting partnerships in Pelican State.
Bitcoins are the most famous and valuable cryptocurrency, with an estimated 46 million Americans owning some bitcoin. Bitcoins are created through a process known as mining. When bitcoins are transferred from one person to another, it is recorded on a digital ledger, which requires processing power to make this possible. The computer that provides its processing power to record the transaction is rewarded with a small amount of Bitcoin. With the number of bitcoins capped at 21 million, the race for the remaining bitcoins is in full swing, especially as the price is still above $ 50,000.
Bitcoin mining requires two main components. One of them is computing power, which Bitcoin miners build special computers for in order to generate it. The other component is electricity. Because the mining process can be energy intensive, the price of energy can dramatically affect the profitability of mining around the world.
This is where Louisiana has an advantage over any other state in the nation. A recent report from the US Energy Information Administration shows that Louisiana has the lowest average retail price for energy per kilowatt hour (kWh) at 7.51 cents. That is more than three cents per kWh below the national average. Additionally, Louisiana energy producers often have many stranded energy resources, such as natural gas, that they literally dispose of by lighting fires.
That energy could instead be productively harnessed through partnerships with Bitcoin mining companies. These partnerships would create a new industry in Louisiana, which in turn would bring more jobs to Louisiana. Also, wasted energy resources would instead be used in productive ways that improve the state economy.
Now would be the best time for Louisiana to take advantage of its bitcoin mining advantages. China, which previously hosted a large amount of mining activity, recently banned all bitcoin-related activities. As a result, mining in China has essentially decreased to zero, while mining in the United States has increased to nearly 40% of all mining activity.
But American bitcoin mining is not evenly distributed across the United States. States like New York, Kentucky, Georgia, and Texas lead the way thanks to lower energy costs and access to low-carbon energy. Given Louisiana’s natural advantages, why hasn’t the state become a center for mining activities?
One reason for this is simply that political leaders failed to make Bitcoin mining a priority. In Texas, Governor Greg Abbott hosted meetings with bitcoin mining associations to learn how miners can relocate their operations to Texas. Texan politicians believe that Bitcoin mining will not only create jobs, but also strengthen the state power grid and help prevent outages like last winter.
Political leaders in Louisiana should follow the example of other states. It may just take a visionary political leader to meet Bitcoin enthusiasts and sell them about the potential of low-cost and abundant energy to open the floodgates for a new industry to take root in Louisiana. It is time for Louisiana to enter innovative new industries like Bitcoin. The combination of Louisiana’s natural resources and a new innovative industry can set the Louisiana economy on a new path to prosperity.
Eric Peterson is the director of the Pelican Center for Technology and Innovation