Can Louisiana “Mine” Its Business?
Recently, Houston, Texas hosted the Empower conference which focused on Bitcoin mining. The conference brought together the energy industry and the Bitcoin industry to find ways to partner together not only to profit but to address many of the issues that energy states like Louisiana face. If Louisiana could adopt some of these ideas, not only would there be more jobs and opportunity across Louisiana, but it could save the state money on environmental cleanup.
Before addressing those ideas, it’s worth giving a brief overview of how Bitcoin and Bitcoin mining works. Bitcoin is a digital currency. So instead of sending dollars over an app like Venmo or PayPal to purchase a good or service, you can instead send Bitcoin. There are a few factors that make Bitcoin unique. Foremost, Bitcoin is entirely digital and doesn’t rely on traditional financial institutions to send Bitcoin from one person to another. Instead, it relies on people using their own computers to complete transactions.
The people who complete these transactions are called “miners” and are rewarded with Bitcoin for completing these transactions. In the early days of Bitcoin, many people just used their personal computers to mine but as the ecosystem grew and Bitcoin became more valuable, around $40,000 per Bitcoin today, people have now constructed sophisticated computers with the sole purpose to mine Bitcoin.
Bitcoin mining has proven to be an energy-intensive task, so those wanting to mine Bitcoin have flocked to energy-rich states like Texas and Wyoming to set up shop. Miners move to these states because they can purchase energy below market rates, often by taking advantage of natural gas that would otherwise be flared and using it to generate electricity to mine Bitcoin instead. This is a win for the energy producer, the Bitcoin miner, and the environment.
But while the partnership between the energy industry and Bitcoin miners in Texas is only growing, it remains a little more than a blip on the radar in Louisiana.
One policy Louisiana could put in place to supercharge this industry is to allow for the creation of deregulated power zones. Because of all the laws and regulations on the books in Louisiana, it is difficult for Bitcoin miners to partner directly with energy producers. This policy would allow for the creation of 640-acre deregulated power zones by local governments. These zones would make it easier for energy producers and Bitcoin miners to partner together.
Another innovative proposal is the use of Bitcoin mining to address the environmental concerns of orphaned wells. These wells previously produced oil but for one reason or another, the previous owners abandoned them. If these wells are not decommissioned properly, it can lead to a variety of negative environmental impacts. Louisiana is spending millions of dollars to address these issues, but Oklahoma has found a novel way to partner with Bitcoin miners to address these concerns by spending fewer tax dollars. Specifically, a commission is discussing an idea to partner with Bitcoin miners to allow them to mine Bitcoin with the natural gas that is released in the oil production process. The Bitcoin miner would then take on the responsibility of decommissioning the well after a period of time.
While such a program is still in its design phase, Louisiana could start now by creating a commission to design a partnership program. They could also work to identify which orphan wells the state has responsibility for and which ones would be viable for Bitcoin mining.
Louisiana’s natural resources make it a perfect match for Bitcoin mining which continues to be a growing industry. With a little creative thinking, Louisiana can not only bring jobs and opportunities to the state but tackle other problems as well.