El Salvador plans first 'Bitcoin City' at the base of a volcano

El Salvador’s president Nayib Bukele announced his government is planning to build an oceanside ‘Bitcoin City’ at the base of a volcano.

‘Invest here and earn all the money you want,’ Mr Bukele told a cheering crowd in English at the closing of the Latin American Bitcoin and Blockchain Conference being held in El Salvador.

Bitcoin has been legal tender in El Salvador alongside the US dollar since September 7.

‘A bond offering is scheduled to happen in 2022 entirely in Bitcoin,’ said Bukele, wearing his signature backwards baseball cap. 

Construction would begin 60 days after financing was ready and the city would be built near the Conchagua volcano. The city and its energy-intensive Bitcoin mining would be powered by the geothermal energy of the volcano.

The Conchagua volcano sits in southeastern El Salvador on the Gulf of Fonseca. The Salvadoran government is already running a pilot Bitcoin mining venture at another geothermal power plant next to the Tecapa volcano.

The government will reportedly provide land, infrastructure and work to attract investors and the best part—the only tax you’ll need to pay is Value Added Tax (VAT), half of which would be used to pay the municipal bonds and the rest will be used for infrastructure and maintenance.

Comparing his plan to cities founded by Alexander the Great, Bukele said that his ‘Bitcoin City’ would have no property, income or municipal taxes and the city would have zero carbon dioxide emissions.

The proposed public infrastructure would cost about 300,000 Bitcoins (£8.7 million).

The city is aimed at attracting foreign investment with plans for residential areas, shopping centres, restaurants and a port. The president in his speech also touched on plans for digital education, technology and sustainable public transportation.

The El Salvador government is backing Bitcoin with a $150 million (£111 million) fund. To incentivise Salvadorans to use it, the government offered $30 (£22) worth of credit to those using its digital wallet.

Critics have warned that the currency’s lack of transparency could attract increased criminal activity to the country and that the digital currency’s wild swings in value would pose a risk to those holding it.

Bitcoin was originally created to operate outside government-controlled financial systems but El Salvador’s president is betting on it to attract foreign investment that would make it cheaper for Salvadorans living abroad to send money home to their families.

Voters gave the highly popular president’s party control of the Congress earlier this year. Bukele’s party subsequently took control of other branches of the government including the constitutional chamber of the Supreme Court and the attorney general.

Many Salvadorans are sceptical about Bitcoin and its bumpy introduction has even fuelled protests against the government.

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