El Salvador continues to support its bitcoin (BTC) adoption campaign, with President Nayib Bukele announcing this November 21, 2021, the launch of Bitcoin City, which will be funded initially by bitcoin bonds worth a total of $1 billion.
El Salvador continues to support its bitcoin (BTC) adoption campaign, with President Nayib Bukele announcing this November 21, 2021, the launch of Bitcoin City, which will be funded initially by bitcoin bonds worth a total of $1 billion.
On September 7, 2021, El Salvador surprised the world and chose to use bitcoin as the country's official currency. According to N. Bukele, the Conchagua volcano will provide all the energy needed for the entire city and will also power the bitcoin mining. A large amount of electricity is needed to run the computers for cryptocurrency mining. In El Salvador, some of this energy is provided by a geothermal plant powered by the Tecapa volcano. According to Mr. Bukele, this Tecapa-related facility will initially be used for Bitcoin City, before a second geothermal plant, powered by the Conchagua volcano, is built.
"Zero CO2 emissions. It is a completely ecological city" assured the Salvadoran president.
The initiative was first announced by Mr. Bukele at the Bitcoin Week conference in El Salvador, which aimed to celebrate the widespread adoption of bitcoin in the country and increase citizen participation.
"In #BitcoinCity, we will have digital and technological education. Geothermal energy for the whole city and efficient, sustainable public transportation. " N. Bukele.
The development of Bitcoin City will be supported by the participation of important companies in cryptocurrencies, including the centralized exchange Bitfinex and Adam Back's Blockstream, offering the necessary infrastructure for the development of the city, such as for mining or the lightning network that facilitates instant transactions with micropayments. According to Bitfinex CTO Paolo Ardoino, the exchange platform will support El Salvador's Bitcoin City initiative by launching a securities platform to hold Bitcoin bonds. He added:
"The platform will soon host many local and foreign digital asset offerings developing a new digital asset regulation for the country! El Salvador, Bitfinex and Blockstream are making history together."
The first plan 🗺
The president envisions Bitcoin City becoming a fully functional city with residential areas, shopping malls, restaurants, a port, "everything around bitcoin." In addition, residents will only be subject to value-added tax (VAT), which Mr. Bukele says will be used to pay for the municipality's obligations, and the rest for public infrastructure and city maintenance.
At the conference, Blockstream's head of security, Samson Mao, clarified the feasibility of sourcing $1 billion in bitcoin bonds to fund the project. These bonds will be called "volcano bond" and this sale will be supported by bitcoin for 10 years.
"At Bitfinex, they have a lot of whales (whales = large bitcoin carrier). I don't see a problem filling a billion dollar bond."
Mao also informed citizens that $500 million worth of Bitcoin bonds will be subject to a five-year lock-up period, effectively removing the invested capital from global circulation.
Half of the funds will be invested in Bitcoin and the other half in infrastructure, said Bukele, who did not specify when he plans to build the city.
Shortly after the country's population adopted Bitcoin, the government of El Salvador reinvested the unrealized gains in various infrastructure development projects.
In early November, Bukele announced that the surplus in the state's Bitcoin Trust account would be used to build 20 new schools.
In mid-October, the government of El Salvador reinvested $4 million from their Bitcoin Trust earnings to build a new veterinary hospital in the capital, San Salvador.
It is therefore a very promising future that El Salvador offers us regarding the financial management of the country and its massive adoption of Bitcoin. This will undoubtedly generate a massive influx of tourists.
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