El Salvador to build ‘bitcoin city’ at base of volcano

El Salvador President Nayib Bukele announced the Central American country will now have its very own “bitcoin city.”

The country made headlines earlier this year when it became the world’s first to accept bitcoin as official tender.

The new “bitcoin city” will be constructed in the shape of a coin near the base of the Conchagua volcano. The city will use geothermal energy to power bitcoin mining.

To begin construction of the city, El Salvador will raise a billion dollar “bitcoin bond” with help from crypto infrastructure company Blockstream.

$500 million from the bond will be to build out the city and another $500 million will be used to purchase bitcoin.

There will be some additional revenue from a value-added tax (VAT) but the new city won’t levy any other taxes like capital gains, property, or income taxes.

“Residential areas, commercial areas, services, museums, entertainment, bars, restaurants, airport, port, rail — everything devoted to bitcoin,” Bukele told El Salvadorians at a bitcoin event Saturday.

Construction of the city is expected to begin in 2022.

El Salvador was the first country to accept bitcoin as legal tender. The nation purchased $26 million of the digital currency before officially unveiling its bitcoin adoption in September. Residents can now pay taxes, buy homes, and purchase goods and services with the digital asset.

Critics have contended that tying part of a country’s fortunes to such a volatile asset class is risky, but boosters have said bitcoin is granting access to the financial markets to everyday people.

El Salvador has also announced plans to use the state-owned geothermal electric company to harness volcanic energy to mine cryptocurrency.