A ‘Bitcoin City’ powered by a volcano is coming to El Salvador
El Salvador plans to inaugurate a Bitcoin City backed by 1 billion dollars of Bitcoin bonds. The development of Bitcoin City will be aided by the proactive involvement of prominent crypto companies, such as Bitfinex and Adam Back’s Blockstream.
El Nayib Bukele, the Bitcoin-friendly president of Salvador, announced on Saturday that the country plans to build a bitcoin city in the department of La Unión, between La Unión and Conchagua.
In 2022, Bitcoin-backed billion-dollar bonds will be issued to finance the development of the so-called “Bitcoin City”. In his vision for Bitcoin City, Bukele envisions residential areas, shops, restaurants, a port, as well as “everything Bitcoin.” Residents, in addition, are only liable for VAT, which will be used by the municipality to pay off its bonds, and by the rest of the city to maintain its infrastructure.
During his presentation, Bukele explained that Bitcoin City will use geothermal energy from nearby volcanoes and will be tax-free, except for value-added tax (VAT). Bukele said: “Invest here and make all the money you want. This is a fully ecological city powered by a volcano.”
In addition to paying off the bonds issued to fund the startup costs of the city, the money would be used to fund public services, Bukele said, adding that 300,000 Bitcoins would be required for the infrastructure to be completed. The details of Bukele’s “Bitcoin city” are sparse, but the leader hopes to attract foreign Bitcoin investment. In his opinion, we should build some Alexandrias if we want bitcoin to spread around the world.
In a brief sketch of the city’s topography, Bukele said it will have a circular shape, an airport, and residential and commercial districts. A view of the central plaza from above will look like the Bitcoin symbol. Furthermore, El Salvador has partnered with Blockstream and iFinex to issue bonds. As the government’s bookrunner, iFinex will assist in writing new tokenized securities laws. This new regulatory framework will then give iFinex the first license to issue Bitcoin-backed billion-dollar bonds on Bitfinex securities. The CSO of Blockstream, Samson Mow, was also on hand and confirmed that the bonds will be issued on Blockstream’s Liquid Network.
In the aftermath of Bitcoin’s mainstream adoption, the El Salvadorian government invested unrealized gains into a variety of infrastructure development projects. The currency’s rising prices led El Salvador to report a surplus of $4 million in its Bitcoin trust last month. In addition to building a pet hospital, Bukele announced he would use the money for other projects.
Meanwhile, Bitcoin wallet Strike has been assisting El Salvador in its Bitcoin adoption process, and on October 14, El Salvadorans noticed a new “Pay Me in Bitcoin” feature that converts direct bank deposits to Bitcoin. El Salvador now holds 1,120 Bitcoins, taking its total holdings to 1,120 BTC after Bukele took advantage of a drop in Bitcoin prices last month.
At the end of the day, Bitcoin city will be 100% powered by local geothermal energy. Additionally, El Salvador plans on raising about $1 billion through a “Bitcoin Bond” issued in partnership with Blockstream, a provider of digital assets infrastructure. It is estimated that half of the funds will be spent on buying bitcoin, while the other $500 million will be used for energy and bitcoin mining infrastructure.
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