El Salvador Announces Plans for Bitcoin City

The President of El Salvador, Nayib Bukele announced on Saturday that the country has kicked off plans to build a new “Bitcoin City”. The new city will be built near a volcano, and will be funded by the cryptocurrency after which it is named.

Like any other city, it will have entertainment, usual services, residential areas, commercial areas, restaurants and even an airport. However, it will be built near the Conchagua volcano in the South-Eastern part of the country.

President Bukele announced that the city’s construction will begin as soon as 2022, and the city will not have any taxes apart from VAT (Value Added Tax).

El Salvador was the first country in the world to officially pass a law that allows Bitcoin to be accepted as a legal tender in the country. However, this move was not positively received by some members of the country’s population.

In September, thousands of the country’s citizens and/or residents hit the streets to protest against the law, showing their disapproval of the country’s decision. The protesters made known their fears that introducing the cryptocurrency into the country could lead to national instability. In order to allow citizens make use of the cryptocurrency, the country has also launched a bitcoin wallet.

Apart from the construction announcement, El Salvador also has plans to raise around $1 billion in a partnership with Blockstream, a digital assets infrastructure company. Half of the money will go towards buying bitcoin, while the other $500 million will go towards energy as well as bitcoin mining infrastructure, according to the government.

Mining is an energy-centric process of creating new bitcoin by solving cryptographic puzzles. The country’s government says that it plans on using geothermal energy obtained from the volcano to power the mining process.

Chief Strategy Officer at Blockstream, Samson Mow said that the bond has a five-year lock up which will take about $500 million worth of bitcoin off the general market for that time period. Blockstream also announced that those who invest in the bond will receive an annual special dividend for their investment.