The fact that El Salvador is now something of a “home” for Bitcoin was already widely understood, but that Texas also aspired to such a role was not at all clear.
However, Texas still produces large amounts of fossil energy sources, so it may be interested in leveraging Bitcoin to monetize any excess energy produced, given the low cost of production.
Indeed, it is no coincidence that, for example, some Bitcoin mining farms in Texas long ago began using waste gas to power their machines.
Bitcoin (BTC): the El Salvador initiative in Texas
A couple of days ago, El Salvador’s ambassador in the US, Milena Mayorga, announced that she has a new ally, namely Texas, with whom they are discussing the possible opening of a second Bitcoin embassy and projects for trade and economic exchange.
El estado de Texas, nuestro nuevo aliado.
En mi encuentro con el Secretario Adjunto del Gobierno de Texas, Joe Esparza @TXsecofstate, abordamos la apertura de la segunda Embajada #Bitcoin y de ampliar los proyectos de intercambios comerciales y económicos. 🇺🇸🤝🇸🇻 pic.twitter.com/NcmOjeadl6
— Milena Mayorga (@MilenaMayorga) February 14, 2023
Mayorga officially met with Texas Deputy Secretary of State Joe Esparza and reported that in 2022 the total trade volume between El Salvador and Texas was more than $1.2 billion.
El Salvador is a tiny state compared to Texas: 21,000 km² versus nearly 700,000 km², and six and a half million inhabitants versus 28.7 million. It is enough to mention that the urban area alone where Huston, i.e., the main city of Texas, is located, has as many as 5.8 million inhabitants.
In addition, Texas is also a real economic powerhouse, with a GDP that is not only the second absolute among all US states, but that alone turns out to be higher even than that of Russia, Canada, or Italy.
So for El Salvador it can be a very important ally, given that El Salvador’s annual GDP is only $32 billion, which is only 27 times the volume of trade relations with Texas.
However, it remains difficult at this time to imagine what role Bitcoin could realistically play within this relationship, and why Milena Mayorga called the one they would like to open in Texas a “Bitcoin embassy.”
El Salvador’s previous Bitcoin embassy
In fact, El Salvador has already established a Bitcoin embassy.
It did so in October 2022 in Lugano, Switzerland, namely at the Plan B Forum.
The world’s first #Bitcoin diplomat representing the world’s first #Bitcoin nation in the first ever #bitcoin embassy of 🇸🇻 in Lugano
— Stacy Herbert 🇸🇻🚀 (@stacyherbert) October 28, 2022
The ambassador is Josue Lopez, honorary consul of El Salvador in Switzerland.
Lopez says he represents both countries, and is bullish on both Lugano, El Salvador, and Bitcoin.
Humbled and honored to be given this immense responsibility, to represent both of the countries that formed me and were part of my development. Bullish on Lugano 🇨🇭, Bullish on El Salvador 🇸🇻 and Bullish on #Bitcoin. pic.twitter.com/In9be9HMUI
— Josue Lopez 🇸🇻🇨🇭 (@JosueLopezGal) October 28, 2022
At this point, one might imagine that a similar initiative in Texas suggests that the US state is also thinking about doing something more with Bitcoin.
Lugano is trying to make BTC and USDT usable everywhere in the city, in fact, so much so that it has become for all intents and purposes a Bitcoin-friendly city. Might the state of Texas want to become one as well?
Texas and Bitcoin
In January, Texas submitted a proposal to allow Bitcoin to be recognized as an authorized investment.
This would also allow institutions to invest in Bitcoin, and it does seem to suggest that there is political interest in Texas with the aim of making the state Bitcoin-friendly.
Then again, the US is by far the largest country in the world by Bitcoin hashrate, and Texas certainly does not want to miss the opportunity to do business with mining.
To this it should be added that the state has also been interested in technological innovation for some time now, as evidenced for example by Tesla’s Giga Factory opened last year in Austin.
On the other hand, it is not yet clear what role Bitcoin will play on public finances and institutional investments in Texas, but it is more than plausible that from this point of view something has already moved, although not yet officially.
What is certain is that if Texas decides to become Bitcoin-friendly this could have a strong positive impact on the BTC market, especially in the medium and long term.
Lugano is a really small city, though important as a European crypto hub, while Texas is a real world power. While it is hard to imagine it competing with New York, and Miami, as a major US crypto hub, it is possible to imagine it could become one.
Then again, El Salvador itself is trying to become a Latin American crypto hub, so an alliance between the two suggests that they may in fact be working on similar projects, on different territories.
Nor can it be ruled out that this could be a political move, since the current US government is Democratic and apparently skeptical of cryptocurrencies, while Texas is a Republican fiefdom and could play a key role in the upcoming presidential election.
Moreover, what is expected to be one of the leading Republican candidates for president in 2024 is Florida Republican Governor Ron DeSantis, a supporter of Bitcoin and governor of the state where there is the current largest crypto hub in the US, Miami.
It is worth noting that since New York’s new Democratic mayor was elected in 2021, the city has yet to become a full-fledged crypto hub despite proclamations and ambitions to do so, whereas Miami has already become a full-fledged one with a Republican mayor.
Therefore, it is possible that the political clash in the US between Democrats and Republicans is also playing out over the role that institutions should play vis-à-vis the crypto sector, and in this it certainly does not help at all that FTX co-founder and CEO Sam Bankman-Fried has supported mostly Democratic politicians.