In terms of Bitcoin, El Salvador has no shortage of objectives. This little country in Central America, led by a young progressive leader, aspires to become the first Bitcoin city in the world, powered by geothermal energy.
Despite numerous complaints, El Salvador’s love affair with the first cryptocurrency on the market persists. Following the announcement of the building of 20 schools and a veterinary hospital funded by proceeds from bitcoin purchases, the development of this hub is El Salvador’s way of expressing its appreciation.
The massive project will be financed by bonds tokenized in bitcoin, according to Nayib Bukele, who unveiled it at the “Bitcoin Investments” meeting. The building of this technology city’s infrastructure should begin by 2022.
Coupled with financial incentives, it’s a win-win situation
Between the communities of La Unión and the volcano of Conchagua, the Bitcoin city will be built in the Union department’s east. El Salvador officials have not yet revealed the size of the country. The city will generate power using geothermal energy from the country’s volcanoes.
El Salvador’s officials have been pondering the prospect of utilizing this energy paradigm to assist ecological mining in their nation for quite some time. Nayib Bukele had already tweeted in June:
“Our engineers recently informed me that they drilled a new well that would supply roughly 95MW of emission-free geothermal energy from our volcanoes.” We’re now working on a whole Bitcoin mining center based on it.
Nayib Bukele – President of El Salvador
This energy infrastructure will be well-equipped in the bitcoin city. The Salvadoran president informed the enormous gathering at the meeting on Saturday:
We will be offering digital and technology education in #BitcoinCity. Geothermal energy for the whole city, as well as efficient and environmentally friendly public transportation.
Nayib Bukele – President of El Salvador
Nayib Bukele stated the city’s design will be circular, with airports, residential communities and commercial centers “all around Bitcoin.”
Investors who live in the space will not be subject to any taxes, with the exception of the VAT, which will be used to fund bonds, public infrastructure, and municipal upkeep.
Tokenized bonds are used to fund Bitcoin City
El Salvador plans to issue bitcoin-denominated bonds to cover the project’s funding needs. The Salvadoran government will assist in issuing bonds to the market through blockchain startups Blockstream and the Bitfinex Exchange. Holders of El Salvador’s tokenized bonds would get 6.5 percent of their shares through the Liquid network, according to Samson Sao, the director of Blockstream, who spoke alongside Bukele.
The bond is scheduled to mature in 2022. Half of the bond fund will be turned into Bitcoin, while the other half will be utilized to build infrastructure and expand bitcoin’s geothermal mining facility. For a period of five years, the bitcoin part of the fund will be frozen.
Bukele, we believe, wants to use Bitcoin to turn his country into the Singapore of Latin America. The key issue that many observers are asking is whether or if this technique of bitcoin funding will help El Salvador one day escape the abyss of IMF debt.
