El Salvador, the first and currently only country in which Bitcoin is a legal tender has announced plans to build an entire city based on the world’s most popular cryptocurrency. The city will be called “Bitcoin City” and the announcement came on Saturday night during a presentation by President Nayib Bukele while the country celebrated Bitcoin week.
According to the information from the President, “Bitcoin city” will be located along the Gulf of Fonseca situated near a volcano. The idea is to make the volcano a source of power for Bitcoin mining. It is the government’s plan to provide energy for both Bitcoin mining activities and the city from the volcano. This makes sense because Bitcoin has been hugely criticized in the past for its excessive power consumption during its mining process. Out of environmental concerns, electric vehicle company Tesla stopped accepting Bitcoin as a means of payment for its electric vehicles and promised to resume accepting the cryptocurrency once sustainable ways of mining it comes up.
In September, amid huge criticisms from globally renowned bodies, El Salvador became the first country to adopt Bitcoin as a legal tender. El Salvador’s President – President Nayib Bukele, also announced months back that El Salvador was partnering with Strike, a digital wallet company, to build the country’s modern financial infrastructure using blockchain technology. Amid global criticism and scepticism, Nigel Green, the Chief Executive and founder of deVere Group, a financial services giant, described El Salvador’s move as ground-breaking in terms of greater adoption of Bitcoin. “El Salvador is making history with a bold jump into the future of money by officially recognizing Bitcoin as legal tender together with the US dollar,” he said adding that by diversifying the nation’s dollar reserves into Bitcoin, there could be additional opportunities for El Salvador to increase the size of its reserves; the country could benefit from significant investment and capital inflows as digital asset organizations are likely to relocate to the Bitcoin-friendly state.
During his presentation at Bitcoin week, El Salvador’s President also noted that “Bitcoin City” will be a metropolis. According to him, it won’t just be a mining hub as people would imagine. It is going to be a fully functional city with residential and commercial areas, restaurants, an airport as well as port and rail service. The plan for the city is to be laid out in a circle with a plaza that’ll host the Bitcoin symbol located right in the middle. The city will have no income, property, capital gains or payroll taxes, he said.
The country plans on issuing a $1 billion US “Bitcoin bond”, a tokenized financial instrument developed by Blockstream, on Liquid Network. $500 million, out of this amount will be used to construct energy and Bitcoin mining infrastructure while the balance of $500 million will be used to acquire more Bitcoin, increasing the country’s Bitcoin reserves to about 2,000 Bitcoins. Also, according to a press release by Blockstream, the country plans to create a securities law and grant a license to Bitfinex Securities to process the issuance.