In a groundbreaking move, El Salvador’s President Nayib Bukele has unveiled an ambitious plan to revolutionize the nation’s Bitcoin mining operations. This initiative, inspired by a recent social media post, showcases the country’s innovative approach to harnessing natural resources for cryptocurrency mining. El Salvador has successfully mined 474 Bitcoins, valued at approximately $46 million, using geothermal power sourced from its volcanoes.
Harnessing Volcanic Power for Bitcoin Mining
The President’s proposal to rent out the country’s numerous volcanoes for Bitcoin mining has garnered significant attention. With over 170 volcanoes, El Salvador offers a vast and untapped energy reservoir that could attract global miners seeking cost-effective solutions. This creative strategy aims to position El Salvador as a leader in sustainable and efficient Bitcoin mining.
Government Support and Industry Enthusiasm
Daniel Alvarez, Director General of Energy, Hydrocarbons, and Mines, responded swiftly to President Bukele’s vision. His team is actively working on developing a new geothermal law to facilitate this initiative. Additionally, Max Keiser, a senior Bitcoin advisor to the President, praised the concept, emphasizing its potential to catapult El Salvador to the forefront of the global Bitcoin per capita (BPC) race.
The Ambitious Bitcoin City Project
El Salvador’s exploration of geothermal power extends beyond mining. The country has embarked on the ambitious Bitcoin City project, strategically located near a volcano to utilize geothermal energy. This city aims to be a self-sustaining metropolis, featuring residential and commercial areas, restaurants, an airport, and comprehensive port and rail services. Notably, all activities within the city, including Bitcoin mining, will be exempt from taxes, except for value-added tax.
To fund the development of Bitcoin City, El Salvador introduced the “Volcano Bond,” a Bitcoin-backed bond designed to attract investors and support the city’s growth.
Criticisms and Opportunities
Despite the enthusiasm surrounding these initiatives, criticisms have emerged, particularly from ecologists. Concerns have been raised about the sustainability of volcano-generated energy and its ability to meet the high demands of mining operations. Nevertheless, the potential for leveraging El Salvador’s abundant volcanic resources has attracted foreign companies interested in renewable energy projects.
In June 2023, Tether announced its involvement in a $1 billion investment in “Volcano Energy,” a company developing a 241 MW renewable energy generation park in Metapan. This initiative aligns with El Salvador’s broader vision of capitalizing on its natural resources for economic growth.
El Salvador’s Bitcoin Journey
Amidst these developments, El Salvador’s Bitcoin holdings have experienced substantial gains during the ongoing market rally. The nation possesses over 6,000 BTC, with an unrealized profit exceeding $168 million. Since declaring Bitcoin as legal tender in 2021, El Salvador has steadily increased its cryptocurrency reserves, positioning itself as a pioneer in the global adoption of digital assets.
