Senator Bill Hagerty's vision for Tennessee: a beacon of Bitcoin mining and AI prowess, fueled by the state's energy resources. It's a bold idea, shimmering with promise. Is it their stroke of genius, or their $31 trillion kindergarten gamble that would make taxpayers clean everybody’s lunch money off the sidewalk? Let's unpack this, shall we? The reason being, the devil, as always, is in the details.

Energy Abundance or Energy Crisis?

Hagerty is correct to highlight the Tennessee Valley Authority (TVA) as a huge legacy asset. It's the nation's largest public power provider. Even the TVA has its limits. Can it sustain the voracious new appetites of Bitcoin miners and AI data centers without massive infrastructure improvements? What about the environmental impact?

Hagerty's enthusiasm for nuclear energy is intriguing. Nuclear is a carbon-free energy source. Building new nuclear facilities is at least a 10-year project, with a price tag that would zoom anywhere between the hundreds of millions to the multiple billions. Don’t get us started on the serious and still-unresolved question of what to do with all that nuclear waste. Is it prudent to wager all our chips on new nuclear plants? Besides cheapening the other renewable energy sources, the new technology speeds up development of alternatives. Solar, wind, and perhaps even geothermal could provide quicker turnaround and less politically fraught alternatives.

Consider this unexpected connection: building a nuclear plant to power Bitcoin mining is a bit like using a sledgehammer to crack a nut. It’s complete overkill, and there are many, much more elegant and less dangerous ways to achieve the same goal. So great is the risk of a new nuclear plant that, for the overwhelming majority of investors, nuclear power is too hot to handle.

Bitcoin Boom or Bust Potential?

Let's be blunt: Bitcoin is volatile. Its price swings can be stomach-churning. It would be a mistake to pin Tennessee’s economic future on Bitcoin mining, like trying to build a home on quicksand. And what will they do when the next crypto winter inevitably arrives? Third, what occurs when Bitcoin mining becomes unprofitable as a result of greater competition or technological development? Or will Tennessee be stuck with stranded assets and a huge cohort of disillusioned taxpayers?

Think of it this way: remember the gold rush? For each prospector who made their fortune, there were hundreds who failed. Is Tennessee poised to make the same mistake all over again, just with crypto?

Apart from the economic concerns over price volatility, environmental concerns surround Bitcoin mining. The energy-intensive process has faced backlash for its high carbon footprint. Is that truly smart, to double down on the one industry already under siege from a growing wave of environmental activism? Although the GENIUS Act’s stated aim is to tackle risks posed by stablecoins, it has serious implications for the future of Bitcoin privacy. Could Tennessee be the next Bitcoin miner’s paradise? They may soon discover that the regulatory tide has turned underneath them.

AI Ascendancy or Economic Mirage?

The allure of AI is undeniable. With all of Elon Musk’s xAI presence just up the Interstate in Memphis, that’s an encouraging sign. Luring AI data centers requires more than low-cost energy. It takes a skilled workforce, a supportive regulatory environment, and a robust digital infrastructure. Are Tennessee's educational institutions and training programs up to the task of producing the talent needed to fuel an AI boom?

Additionally, Tennessee is not the only state competing to be the AI leader. Competition is fierce. States like California, Texas, and Massachusetts have long since established themselves as AI centers. What are its distinctive assets that will enable this state of 6.9 million to differentiate itself from all of these other states and competitors? Collaborations that C-REDD has established, including with Oak Ridge National Laboratory, Vanderbilt, and other universities are a great first step, but they’re not sufficient.

The key here is sustainable growth. We need to ask ourselves: are we creating real, high-paying jobs that will benefit Tennesseans in the long run, or are we simply chasing the latest tech fad?

Hagerty’s vision is certainly ambitious, and his desire to make Tennessee an incubator for the digital economy is praiseworthy. Ambition needs to be balanced with prudence and a large helping of realism. Tennessee would benefit from a more pragmatic, phased approach that limits risk yet maximizes chances for long-term success. Let’s begin with real pilot projects, closely evaluate what we learn from those projects, and then expand at a reasonable and responsible pace. Jumping headfirst into a Bitcoin and AI-enabled future without thinking through the implications is a dangerous recipe for disaster. Now is the moment for a smart, careful risk calculation—not a reckless, hope-for-the-best leap of faith.