#salvadors

El Salvador's Bitcoin Volcano in sight

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El Salvador continues its dedication to becoming a global leader in the Bitcoin mining industry through the development of its ambitious Volcano Energy project.

The country plans to add 241 MW of renewables and 1.3 Eh/s of Bitcoin mining, marking a further step towards “economic freedom,” energy competitiveness, and “self-reliance,” as shared on Twitter by Bitcoin advocate Dennis Porter.

Bitcoin Volcano

Harnessing the country’s renewable resources, the project aims to establish one of the world’s largest Bitcoin mining farms, accompanied by the creation of Volcano Tokens.

The Volcano Energy project focuses on developing a 241 MW renewable power generation park in the Metapan region of El Salvador. This park will showcase the “exceptional solar and wind energy yields available in the country,” with 169 MW of photovoltaic solar and 72 MW of wind energy.

The initial computational power of the Bitcoin mining farm will surpass 1.3 EH/s, funded by a total commitment of $1 billion for the project from “Bitcoin industry leaders.” In addition, the Government of El Salvador will play a role in the project, securing a “preferred participation equivalent to 23% of the revenues.” Furthermore, investors will own 27%, and the remaining 50% will be reinvested in “expanding energy production capacity and advancing Bitcoin mining.”

For comparison, Hashrate Index lists the top mining pools by hashrate, indicating that El Salvador would be a top 20 mining pool by comparison. The largest pool is Foundry with 111.2 EH/s, followed by AntPool, F2Pool, Binance Pool, and ViaBTC pool with 85 EH/s, 50 EH/s, 33 EH/s, and 32 EH/s respectively. At 1.3 EH/s, Volcano Energy would have an equivalent hashrate to NiceHash and KuCoin.

Volcano Tokens

In an April 2022 interview with CryptoSlate, Bitfinex & Tether CTO Paolo Ardoino discussed the revolutionary Bitcoin-backed Volcano Token (VT), representing the first tokenization of a sovereign bond.

He explained that the token serves as a capital raise for El Salvador’s sovereign debt. Half the $1 billion raised will be used to buy and hold Bitcoin for five years, with profits split between infrastructure development and distribution to Volcano Token holders.

Ardoino also revealed that the underlying blockchain for the Volcano Token issuance would be Liquid, chosen for its allow listing feature, helping meet strong KYC and AML requirements from regulators.

Bitfinex Securities will trade the token once the necessary legislative approval is obtained and the company secures a license in El Salvador.

According to Ardoino, he stated that this process could be completed in a matter of weeks. However, a recent Bloomberg report noted that the token is expected sometime in 2023.

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US Senators Express Concerns over El Salvador's Bitcoin Adoption – What's Going On?

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Source: RawBeautyPixels/Adobe

El Salvador’s adoption of Bitcoin as a legal tender has caused concern among American lawmakers, who are calling for a risk report on the potential impact on bilateral economic relations and law enforcement cooperation. 

Last month, US Senators Jim Risch and Bob Menendez reintroduced a bipartisan bill requesting a State Department report on El Salvador’s Bitcoin adoption. 

The bill, dubbed the Accountability for Cryptocurrency in El Salvador (ACES) Act, was initially introduced in February last year.

American lawmakers want an analysis of El Salvador’s adoption of Bitcoin and the risks for cybersecurity, economic stability, and democratic governance in the country. 

In a Foreign Relations Committee blog post, Risch expressed concern regarding the implications of El Salvador’s move to adopt Bitcoin as legal tender, claiming that it could weaken economic and financial stability. He added:

“Given U.S. interest on prosperity and transparency in Central America, we must seek greater clarity on how the adoption of Bitcoin as legal tender may impact El Salvador’s financial and economic stability, as well as El Salvador’s capacity to effectively combat money laundering and illicit finances.”

El Salvador Continues to Double Down on Its Bitcoin Strategy

El Salvador made headlines in 2021 when it became the first country to make Bitcoin legal tender. 

The country has since continued its Bitcoin push, with President Nayib Bukele purchasing large amounts of the cryptocurrency.

In mid-November, Bukele even announced that he will begin buying one Bitcoin per day starting from November 18.

As of now, the country is estimated to have around 2,381 BTC, worth around $65 million, acquired at an average price of $43,357.

Bukele’s Bitcoin experiment has been praised in the cryptocurrency world, but criticized by institutions like the International Monetary Fund and the World Bank. 

More recently, El Salvador also welcomed Saifedean Ammous, a prominent economist and author of “The Bitcoin Standard,” as an economic advisor to its National Bitcoin Office (ONBTC), an entity that manages all cryptocurrency-related matters in the country.

El Salvador’s National Bitcoin Office was created by President Nayib Bukele in late 2022 in conjunction with known Bitcoiners Stacy Herbert and Max Keiser. 

Meanwhile, reports about the adoption of Bitcoin in the small Central American country have been mixed, with indications that it has been slow to take off.

According to government figures, crypto accounts for less than 2% of all of the remittances made to El Salvador. 

Remittances, mostly from overseas-based Salvadorans, are a major source of income for the country. 

In fact, for this same reason, the government promised that BTC would provide more options and greater convenience for those sending and receiving remittances.

The country even launched a dedicated BTC app, designed in large part to facilitate BTC remittances from overseas. But data from last year showed that only two in 10 people who initially downloaded the app are still using it.

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El Salvador’s Bitcoin City Has Not Been Shelved, Say Bukele-linked Bitcoiners

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Source: RawBeautyPixels/Adobe

An El Salvador government-linked organization has rubbished claims that the nation’s ambitious plans to build a haven for bitcoiners have been shelved.

Late last month, a number of Twitter-based individuals claimed that they had come across documentary evidence that the Ministry of Public Works had confirmed that the Bitcoin City project “does not exist.”

They claimed that the ministry had “made it clear” that the project, as announced by President Nayib Bukele in 2022, was “only a publicity [stunt].”

But Escape to El Salvador, an organization that claims to “assist expats in gaining residency and citizenship in El Salvador,” refuted these claims.

The organization claimed:

“There are advanced plans [to create Bitcoin City.] They just haven’t been submitted to this ministry for review.”

However, critics will likely point to the fact that original proposals claimed that work would begin on Bitcoin City “in 2022.”

Has El Salvador Lost its Appetite for Bitcoin?

Several BTC-related projects appear to have been scaled back or put on ice during crypto winter.

These include the issuance of BTC bonds.

Bukele, once very vocal about all things BTC-related on Twitter, has largely refrained from posting about the token in recent months.

He has not been shy of posting news about his sky-high approval ratings, however.

Bukele is seeking to win an unprecedented second term as President.

His Nuevas Ideas Party has a “supermajority” in the nation’s parliament.

Escape to El Salvador is closely linked to the Bitcoin Beach project, a community of bitcoiners who transformed a small group of surfing villages into Bitcoin (BTC)-powered economies.

The Bitcoin Beach project is thought to have been the chief inspiration for Bukele’s pivot to BTC in 2021.

BTC was adopted as the official currency of El Salvador in September 2021.

Bitcoin Beach-linked bitcoiners, such as the mononymous Jeremy, have been working on a number of projects in the nation.

Jeremy is Escape to El Salvador’s Chief Advisor.

The organization is headquartered in the Bitcoin Embassy in San Salvador.

A government-backed Bitcoin Embassy has also been opened in the Swiss city of Lugano.

In February, the Salvadoran government unveiled plans to open a second international Bitcoin Embassy in Texas.

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