El Salvador plans to build the first city powered by cryptocurrency

On Saturday, November 20, 2021, the President of El Salvador, Nayib Bukele, announced that he and his government will commence building a city entirely powered by cryptocurrency. The president stated, ‘invest here and earn all the money that you want’. 

This announcement was made during a gathering by Bitcoin enthusiasts. President Bukele is no stranger to making announcements during Bitcoin-related events as he has also used a conference in Miami earlier this year to announce that they would be the first country to accept Bitcoin as legal tender.

The city, dubbed ‘Bitcoin City’, is planned to be built by the oceanside at the base of Conchuaga Volcano to take advantage of geothermal energy. This won’t only power the city, but the Bitcoin mining as well which involves thousands of computers solving complex mathematical puzzles 24/7.

Its use of geothermal energy also means that the city will have zero carbon dioxide emissions. Aside from that, it will be made to act like any normal city. Meaning that it will include establishments such as airports, entertainment, commercial and residential areas and more. As for the scope of the city itself, the government plans to build it in a circular shape to mimic a large coin representing Bitcoin.

One of the things that the government of El Salvador has in mind with this city is to attract foreign investment to increase city revenue and provide infrastructure, work and land.

Construction of the city won’t start until 2022 where there won’t be any taxes involved aside from value-added tax (VAT). According to President Bukele, the collected taxes will be divided into two; to build up the city and to keep it neat and clean and to fund both municipal bonds and municipal infrastructure and maintenance.

El Salvador also plans to partner with Blockstream to raise 1 Billion USD through a Bitcoin bond. These funds will also be halved with one half being used to buy more Bitcoin and the other one will be dedicated to providing energy and bitcoin mining infrastructure.

On September 7, 2021, Bitcoin became El Salvador’s legal tender and can be used by locals to purchase or pay their taxes.