By Jim Carlton

Nevada Gov. Steve Sisolak on Friday unveiled details behind a plan to allow private industry to develop technology "innovation zones" that would include new cities with their own government.

In particular, the Democratic governor is throwing the welcome mat out to developers of the technology behind blockchain, best known as the record-keeping system behind cryptocurrencies. One of the first big beneficiaries of a bill the governor has proposed would be Blockchains LLC, a Nevada-based firm that has previously announced plans to build a city from the ground up on 67,000 acres of desert land it acquired near Reno in 2018.

Situated near where Tesla Inc. and some other tech giants have expanded in recent years, Blockchains envisions a Painted Rock Smart City and Innovation Park of at least 36,000 people with more than 30 million square feet of commercial and industrial space that would use a "stablecoin" as its cryptocurrency. Over time, the city would support $1.8 billion annually in wages and 40,000 jobs.

The governor, who first introduced the idea for the innovation zones during his State of the State address last month, said in a Zoom press briefing Friday that Nevada needed to do something drastic to lessen a dependence on gaming and tourism that has pushed its unemployment rate as of December to 9.2% -- second highest in the country behind Alaska.

"We cannot wait for economic recovery to come to us," Gov. Sisolak said. "We must accelerate and pursue innovative ways to inject Nevada with new and organic economic growth."

But the proposal is already drawing opposition. One issue is the demand for more water in a parched state where supplies are tight. To help meet the needs of its planned city, Blockchains has secured rights to groundwater near a desert playa 100 miles away where the Burning Man festival is held every summer. The company would build a pipeline to transport the water to its new city.

"Blockchains is setting the stage for a good old fashioned Nevada water war, and the Center and our allies are ready for the fight," said Patrick Donnelly, Nevada state director with the Center for Biological Diversity environmental group.

Officials with Blockchains, headed by cryptocurrency millionaire and attorney Jeffrey Berns, said the proposed city would use only a fraction of the water of a comparable community because of its efficient design. "I would think an idea like this should be their (environmentalists') best friend," said a company spokesman.

Asked in the briefing about the water issue, the governor said "we're always concerned about water in Nevada," but added developers of the innovation zones would have to secure those rights.

Local Storey County officials have questions about Blockchains, too, such as who would be responsible if its crypto city were to go belly up. The spokesman said the developers would assume any losses since the innovation projects would require no public subsidy.

Gov. Sisolak said the cities, by starting from scratch, would be working off "a blank palette" and would rely on the latest in transportation and other technologies to save costs and be more efficient.

"There is no denying it, this is a big idea," the governor said. "But our state is not afraid of big ideas."

Write to Jim Carlton at jim.carlton@wsj.com

(END) Dow Jones Newswires

02-26-21 2054ET