In November last year, President Najib Bukele made an unexpected announcement that El Salvador had plans To build a bitcoin city. Bukele announced Bitcoin City in the area of the Conchagua Volcano on Fonseca Bay, near Honduras and Nicaragua. The idea is to run the entire city using the volcano’s geothermal energy which is completely CO2 free. In addition, the natural energy source must be used for Bitcoin Fan (BTC).
However, the problem with this volcano is that it is not entirely clear how active the volcano is. There are those who say that the volcano is dead and no longer generates geothermal energy for use in Bitcoin City. Additionally, El Salvador appears to have been at odds with Honduras and Nicaragua for years over this region. More specifically, this conflict is about which country is the rightful owner of the bay and the islands to which it belongs. With the announcement of the construction of a Bitcoin city on the borders of this region, Bukele may wake up sleeping dogs.
Question marks over Bitcoin City
Obviously, there are many political question marks about Bukele’s plans to build a Bitcoin City on this site. In theory, it sounds great to build a city from scratch using renewable energy and financially driven by the power of Bitcoin. But in reality it remains to be seen what will happen to him. After all, building a city takes time and it takes a lot to ensure a good quality of life there. In any case, it seems unrealistic to expect that you can move to Bitcoin City in a couple of years and enjoy a thriving infrastructure there for the rest of your life.
You can also ask the question to whom Bukele is actually building the city. As President of El Salvador, you would expect him to do everything in his power to improve the lives of his people. However, the creation of Bitcoin City appears to be nothing but a focus on improving the lives of the poorest section of El Salvador’s population. Bukele portrays the Bitcoin City itself as a hub for investment, wealthy foreigners, and companies looking for a Bitcoin-friendly environment.
On the other hand, you can say that it is never wrong for a country to attract foreign capital. Bitcoin City could put El Salvador on the map as a country and if we’re being honest Bukele has already won a few points for the country. At first glance, Bitcoin City looks like a tacky dream for Bitcoin customers who are looking for a place to establish themselves for the long term. However, the truth is that nothing has been done yet and all the ambitious plans have not yet gone beyond the state of brilliant words. With the bond round opening this year, El Salvador wants to raise $1 billion to start building the city.
Bitcoin City Bond Tour
2022 should be the year when the relationship between El Salvador and Bitcoin is taken to a higher level. If the $1 billion bond round is successful, the country at least has the capital to take some serious steps. The plan now is to invest half of the proceeds from the bond round in the city and the other half to buy bitcoin. With this, El Salvador can, among other things, add $500 million of bitcoin to the state treasury. The rest of the money is allocated to the city’s infrastructure.
Primarily, the city’s infrastructure appears to mean expanding geothermal capacity in order to mine more bitcoins, among other things. This energy must also be used for the city itself. In theory, this means that the city runs entirely on sustainable energy. How successful this would be also depends on the activity of the volcano, which is not entirely disputed.
On January 4, news broke that El Salvador had taken the next step in launching a bond round. The necessary legal papers are on the way to the conference, by which the legal basis for the tour must be laid. “These papers serve to define the legal structure and create legal certainty for anyone buying bitcoin bonds,” Treasury Secretary Alejandro Zelaya said. opposite Reuters. We will likely hear more about bitcoin bonds and the city of bitcoin in El Salvador soon. Anyway, an interesting story to watch.
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