El Salvador plans “Bitcoin City”, raises $ 1 billion via “Bitcoin Bond”

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President of El Salvador Nayib Bukele gestures during his speech at the closing ceremony of the Latin Bitcoin Conference (LaBitConf) in Mizata Beach, El Salvador, where he announced “Bitcoin City” on November 20 2021.

Marvin Recinos | AFP | Getty Images

El Salvador plans to build a “Bitcoin City” near a volcano that will be funded by cryptocurrency, the country’s President Nayib Bukele said on Saturday.

The city will have residential and commercial areas, services, entertainment, restaurants and an airport and will be built near the Conchagua volcano in southeast El Salvador.

Construction will begin in 2022 and the city will have no taxes except value added tax (VAT).

In June, El Salvador passed a law making it the first country in the world to accept bitcoin as legal tender. But all of its population does not agree with the move.

In September, thousands took to the streets to protest the law, fearing the introduction of cryptocurrency could lead to instability in the Central American nation.

The country has also launched a bitcoin wallet to allow citizens to use cryptocurrency.

El Salvador also plans to raise around $ 1 billion via a “Bitcoin Bond” in partnership with Blockstream, a digital asset infrastructure company. Half of the funds will be used to buy bitcoin, while the remaining $ 500 million will go to bitcoin’s energy and mining infrastructure, the government said.

Mining is the energy-intensive process of creating new bitcoin by solving crypto puzzles. El Salvador said it plans to use the volcano’s geothermal energy to power it.

Samson Mow, chief strategy officer at Blockstream, said there is a five-year freeze on the bond that is designed to take $ 500 million of bitcoin off the market during that time.

Investors in the bond will receive an annual special dividend, Blockstream said.

Bitcoin is down about 16% from its all-time high of $ 68,990.90 which it hit earlier this month, but it’s still up over 90% this year.

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