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El Salvador to build the first ‘Bitcoin city’ at the base of the volcano

Salvadoran government plans to build a “Bitcoin city” at the base of the Conchagua volcano in the southeast of the country in 2022, El Salvador La Prensa Gráfica the newspaper reported on Saturday, noting that the city will be designed to harness geothermal energy from the volcano to mine cryptocurrency.

Salvadoran President Nayib Bukele announced his intention to build the innovative metropolis during a speech in Mizata on November 20. Nayib addressed a crowd gathered in the coastal resort town to mark the end of a week-long “Bitcoin Festival” in El Salvador.

“It would be a legal commune, with [a] mayor and everything, ”President Bukele said of the“ Bitcoin City ”project.

“It will include everything: residential areas, shopping areas, services, museums, entertainment, bars, restaurants, airport, port, railway,” he said. “Everything that is devoted to Bitcoin. “

Bukele said his administration was inspired to build the city based on a pre-existing model of municipalities powered by geothermal power plants in El Salvador, particularly in the Usulatán district. Two geothermal power plants are currently operating at Usulatán, which is located a short distance west of the Conchagua volcano. The government of El Salvador plans to power “Bitcoin City” through neighboring geothermal power plants in Usulatán before finally building a new geothermal power plant for the municipality that will use energy from the Conchagua volcano. The stratovolcano is home to active areas on its two peaks, although it has never erupted according to geologists. Energy from the volcano will also be used to mine Bitcoin, Bukele said on Saturday.

“The mining of Bitcoin and other cryptocurrencies is done using sophisticated computers to solve complex mathematical problems. It’s expensive, difficult and consumes a lot of energy, ”according to the BBC.

Salvadoran government to fund new city “in part through billion dollar cryptocurrency-backed sovereign bond issue [Bitcoin],” the Financial Time noted on November 21.

Soldiers from the army and members of the Honduran naval base walk towards the island of Conejo (in the background the Conchagua volcano, on the Salvadoran side), to hoist the national flag, during the celebration of the Day of the national flag. (ORLANDO SIERRA / AFP via Getty Images)

“The bonds will be 10-year bonds denominated in US dollars, with half of the funds converted to bitcoin and the other half used for infrastructure and bitcoin mining,” Samson Mow, director of the strategy of blockchain technology company Blockstream. with Bukele in Mizata on November 20.

“The bonds will be issued in 2022 and construction of the city… will begin 60 days later,” according to the federal government of El Salvador.

“Bitcoin City” will “have no property, income or capital gains tax,” according to Bukele.

“Its infrastructure and other costs will be funded by a sales tax and money raised from bond issues,” he added. Financial Time quoted the president on November 20.

El Salvador became the first country in the world to adopt Bitcoin as legal tender on September 7. abroad through traditional electronic transfers.

Remittances represent around 23% of El Salvador’s GDP. The country has used the US dollar as its official currency since 2001 and estimates that more than 2.5 million Salvadorans live abroad, mostly in the United States. Salvadorans living and working in the United States sent nearly $ 6 billion home to El Salvador last year.

The government of El Salvador created a new digital wallet app, called “Chivo”, in September after legalizing Bitcoin as legal tender. San Salvador issued $ 30 in Bitcoin to each citizen through the digital wallet to encourage them to download the new app.

“Between September and October, Salvadorans abroad sent around $ 32 million in funds to their country using the Chivo wallet,” the head of the country’s Central Reserve Bank said recently. This represents about 2.5% of all remittances sent during those months, ”the Financial Time observed on November 21.

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