Renewables-rich El Salvador plans Bitcoin City

Image: Presidency, El Salvador

Bitcoin City could become digital currency miners’ most desirable address according to El Salvador’s President Nayib Bukele.

The small central American country is fast becoming a Bitcoin ‘hub’ in the western world.

In June this year, the country became the first to adopt Bitcoin as a legal tender, with millions reported to be using the state electronic wallet, named Chivo, for purchases and financial remittances since its introduction in September.

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At the same time the forty-year old president who also was a noted businessman, and envisioning the economic stimulus of Bitcoin, put in place a plan to harness the significant geothermal energy potential from volcanos for cryptomining.

The latest plan, announced at the closing of the “Feel the Bit 2021’ Bitcoin event, is to build a new city – Bitcoin City – in the vicinity of the Conchagua volcano close to the ocean on the country’s southeastern tip.

“Bitcoin City is not only an idea, but will also be a reality in El Salvador. It will have residential areas, shopping centres, restaurants, a port, everything around Bitcoin,” said President Bukele.

“In Bitcoin City we will have mining, agriculture, culture and sports. When we are no longer there, this will last and everyone will be able to see the city.”

To achieve this vision, the government is to provide the land and public infrastructure, while also attracting external investors.

The president also committed to zero income and property taxes, with the only tax a VAT of which one half will go towards the municipality’s bonds and the other half towards the public infrastructure and city maintenance.

Construction is expected to start in 2022 with all funding for the development in the form of cryptocurrencies.

With the drive towards more sustainable cryptocurrency mining, more miners are turning to renewable-rich countries, particularly those with abundant resources offering the promise of a low-cost energy resource.

With China clamping down on mining and calls for a ban in Europe, miners are looking further afield and President Bukele’s expanding Bitcoin vision places El Salvador firmly on the international map.

Currently, almost three-quarters of El Salvador’s generation is renewables-based, primarily from hydro and geothermal.

Bitcoin bond

Separately El Salvador plans to raise $1 billion via Bitcoin bond in partnership with the digital assets infrastructure company Blockstream. Half of the funds will be allocated to Bitcoin with the other half going towards building out energy and Bitcoin mining infrastructure.

President Bukele described the bond as a powerful first step for El Salvador in becoming a global hub for digital capital markets.

“Our long-term commitment is to explore and develop a domestic platform to help facilitate the growth of our digital asset industry.”

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