Good question! There is an origin story here. Straight from the wikipedia’s mouth:
The Free State Project was founded in 2001 by Jason Sorens, then a Ph.D. student at Yale University. Sorens published an article in The Libertarian Enterprise highlighting the failure of libertarians to elect any candidate to federal office, and outlining his ideas for a secessionist movement, and calling people to respond to him with interest. Sorens has stated that the movement continues an American tradition of political migration, which includes groups such as Mormon settlers in Utah, and Amish religious communities.
The organization began without a specific state in mind. A systematic review started by narrowing potential states to those with a population of less than 1.5 million, and those where the combined spending in 2000 by the Democratic and Republican parties was less than $5.2 million, the total national spending by the Libertarian Party in that year. Hawaii and Rhode Island were eliminated from this list because of their propensity for centralized government.
In September 2003 the state vote was held. Participants voted using the Condorcet method to choose the state.New Hampshire was the winner, with Wyoming coming in second by a 57% to 43% margin.Alaska, Delaware, Idaho, Maine, Montana, North Dakota, South Dakota, and Vermont were also on the list.
New Hampshire was chosen because the perceived individualist culture of New Hampshire was thought to resonate well with libertarian ideals. The Free State Project, however, has drawn criticism from some New Hampshire residents concerned about population pressure and opposition to increased taxation. Some Republicans, on the other hand, have responded more favorably to the project, because of their espoused agreement on small government.