Bitcoin’s New $337 Billion Market Opportunity is in… Arizona?

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In late January, the Arizona legislature introduced a new bill to make Bitcoin (BTC 3.60%) legal tender within the state. If the bill passes, Arizona will become the first US state where Bitcoin will be legal tender.

This move – while it may seem pipe dream to many crypto-skeptics – is actually similar to the one El Salvador made in September 2021, when it became the first nation in the world to make Bitcoin legal tender. Since then, the government of El Salvador, led by President Nayib Bukele, has become one of Bitcoin’s strongest supporters on the world stage. It is therefore natural to ask: what would be the implications if Arizona actually made Bitcoin legal tender?

The Arizona Bitcoin Bill

Arizona’s new bill formally states that Bitcoin can be used as a medium of exchange for “the payment of debts, public charges, taxes, and duties.” It would also require merchants to accept Bitcoin as payment for all business transactions. In essence, holding $20 worth of Bitcoin in your digital blockchain wallet would be like holding a physical $20 note in your real-world leather wallet.

Image source: Getty Images.

Of course, Bitcoin is already legal in the United States, but the Arizona Bitcoin Bill would add a whole new dimension. This would impact all businesses in Arizona, whose state GDP was $337.42 billion in 2021. That’s more than 10 times the size of El Salvador’s national GDP. Additionally, the Arizona legislature has also introduced a bill that would make cryptocurrency tax-exempt. In other words, the state government could not tax you on your crypto holdings. If you expect Bitcoin to skyrocket to the moon, that’s a big deal.

But does this Arizona bill really have a chance of being passed? On the surface, that would seem highly unlikely. For one thing, the politician behind the Bitcoin push, State Senator Wendy Rogers, tried to push this bill through in 2022, and it failed at second reading. Wendy Rogers is a very polarizing figure in the world of Arizona politics, so she might have trouble getting real bipartisan support for the bill. And second, some legal experts say the Bitcoin bill could be illegal under the US Constitution’s “contract clause,” which prohibits states from issuing their own money. So even if the bill passes, it could be stalled in court. for a long time.

Potential impact

However, Bitcoin bulls can certainly dream. In El Salvador, for example, the decision to make Bitcoin legal tender has had particularly positive effects. On the one hand, Bitcoin has made it much easier for Salvadorans living outside the country to send funds home. This is important because El Salvador is one of the leading countries in the world when it comes to remittances. Bitcoin has also triggered a surge in “crypto tourism” for the country. A small beach town — known as Bitcoin Beach — was even featured by CBS News’ 60 Minutes. Based on this success, there are now plans to build a Bitcoin city in the country.

So if you extend this example to Arizona, the new Bitcoin bill would definitely impact migrants entering the state for work, given that Arizona shares a 370-mile border with Mexico. It would be much easier for these migrants, who are most likely unbanked, to send funds home. And that could spark a crypto tourism boom for cities like Phoenix. Instead of Bitcoin Beach, Arizona would be able to promote Bitcoin Desert. Come visit the Grand Canyon, then spend your Bitcoin in Phoenix!

There is another possible economic impact here, and that is the possibility of turning Arizona into a crypto hub. Southern California tech entrepreneurs might be tempted to move to Arizona, much like tech entrepreneurs like Elon Musk are now moving to Texas. Add to the fact that Arizona is trying to create tax-exempt crypto property, and you can immediately see how Arizona could become an attractive location for anyone who believes in the future of crypto.

The Global Appeal of Bitcoin

At some point, Arizona could become a real $337 billion market opportunity for Bitcoin. That would only happen if everyone in the state started embracing Bitcoin, of course. And that would probably only happen if there was another big Bitcoin bull market rally in which everyone gets richer. When El Salvador made Bitcoin legal tender in 2021, this was the situation.

That being said, even skeptics have to acknowledge that Bitcoin has recently gained more legitimacy around the world. In December 2022, for example, Brazil passed a sweeping new Bitcoin bill. The Pacific island nation of Fiji has also elected a pro-Bitcoin prime minister. Additionally, several Caribbean island nations are now considering making crypto legal tender.

Arizona is therefore no exception on the world stage. I’m bullish on Bitcoin for the long term, and hope that Bitcoin can one day take advantage of Grand Canyon-sized market opportunities like the one in Arizona.

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