El Salvador to Build ‘Bitcoin City’ Powered by Geothermal Energy

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In Brief
  • El Salvador President Nayib Bukele’s bullish crypto outlook continues as the wheels were set in motion for a Bitcoin City during Bitcoin week in the country’s capital.

  • Bitfinex will be the bookrunner for the bond issuance.

  • The El Salvador government holds a minimum of 1100 bitcoins, buying recent dips.

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A volcano-powered Bitcoin City will be partially funded by $1B in government-issued, dollar-denominated, bitcoin bonds via Blockstream’s Liquid Network, a sidechain of the Bitcoin Mainnet.

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The President of El Salvador, Nayib Bukele, remains bullish about crypto, announcing the construction of an income and property tax-free “Bitcoin City.” The city’s construction will be funded by government bitcoin bonds issued through Blockstream’s Liquid Network and, later, value-added tax.

The president plans to launch the 10-year bonds in early 2022. Bondholders who do not have citizenship will have the issuance of citizenship expedited. The bonds would be locked up for five years, increasing the scarcity of bitcoin and driving the price up. The bonds issued will be worth $1B, and a 6.5% coupon will be given to bondholders. $500M will be used to buy bitcoins, thereafter additional dividends would be paid to investors, following the sale of the bitcoins after five years. El Salvador will license Bitfinex as the book runner for the bond. A book runner is a coordinating entity in the issuance of the bond.

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Bitcoin Adoption Maturing in El Salvador

$500M will be used to develop infrastructure to energize bitcoin using geothermal sources in La Union in eastern El Salvador. The city will have a plaza that will appear as a bitcoin symbol when viewed aerially.

When bitcoin was made legal tender, it had supporters and detractors, and technical glitches abounded on day one. The state now owns a minimum of 1100, buying into the recent dip, as it had in Sep 2021. Merchants were initially skeptical of accepting the cryptocurrency for goods and services, with only 7% set up to receive bitcoin as of early October this year. McDonald’s and Starbucks were among the first merchants in El Salvador to accept bitcoin.

Bitcoin Week Attracts Diverse Bulls

Samson Mow of Blockstream pitched the government the idea of bitcoin bond issuance during Bitcoin Week in San Salvador, the capital city of El Salvador. Bitcoin attracted many different supporters to the festivities, including Jose Schierano, a 51-year-old Argentinian entrepreneur who has traveled to multiple conferences to hear panelists speak. A 30-year-old South American singer named Yessenia Correa who attended has been speculating on price swings since 2015, using the funds to pay for her education. A Colombian programmer, Jessie Rodriguez, who converts remuneration from foreign projects immediately into bitcoin, was also at the Bitcoin Week and hopes that his home country will soon adopt bitcoin in the same manner as El Salvador.

His hopes are well placed, with Colombia being the leader in the number of bitcoin ATMs in Latin America before El Salvador’s president declared bitcoin legal tender earlier this year. Most of the ATMs in Colombia are housed in the capital Bogota.

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