Bitcoin City: El Salvador seeks funds to make city powered by volcano, to launch crypto bonds

El Salvador is planning to launch bitcoin bonds in the first quarter of 2024, with the proceeds earmarked for the development of a groundbreaking “Bitcoin City” powered by a volcanic energy source.

The National Bitcoin Office, responsible for overseeing cryptocurrency-related initiatives, shared that the “Volcano Bond” had secured regulatory approval from the Digital Assets Commission (CNAD), paving the way for the bond issuance in early 2024.

This move comes on the heels of El Salvador’s decision in 2021 to recognize Bitcoin as legal tender, alongside the US dollar, under the leadership of President Nayib Bukele. The integration of Bitcoin into the country’s financial system aimed to streamline and reduce the cost of remittances for Salvadorans, as well as extend financial services to the approximately 70 per cent of the population without access to traditional banking.

Despite these efforts, a May 2021 poll by the Central American University revealed that 71 per cent of respondents believed that cryptocurrency adoption had not positively impacted their family’s economic situation.

President Bukele had previously unveiled plans in 2021 to create a “Bitcoin City” in the eastern region of El Salvador, which was envisioned to harness thermal energy generated by a volcano. The ambitious project was slated to be funded in part by issuing at least $1 billion in volcano bonds.

The Salvadoran government, headed by Bukele, confirmed its acquisition of 2,381 bitcoins, with the latest purchase of 80 bitcoins occurring in July 2022. Furthermore, Bukele declared a daily acquisition of one bitcoin starting from November 17, 2022; however, the government has not disclosed whether this target has been met.

(With inputs from agencies)