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El Salvador’s ‘Bitcoin City’ Will Cost 300,000 Bitcoins
Published Nov 24, 2021 04:00AM ET
El Salvador’s ‘Bitcoin City’ Will Cost 300,000 Bitcoins
- President Nayib Bukele made the announcement at the end of Bitcoin Week, an event in which the government showcased its achievements and new plans related to the cryptocurrency.
- The project will be fully financed in Bitcoins for which the government will issue bonds backed by the cryptocurrency.
- It will be the world’s first green city financed with Bitcoins and powered by geothermal energy.
El Salvador President Nayib Bukele announced the construction of the world’s first “Bitcoin City.” The novel real estate project will be financed with bonds backed by Bitcoins and aims to raise about 1 billion dollars.
During the closing speech of the Bitcoin Week that brought together enthusiasts, investors, and industry experts, the Central American president took the opportunity to talk about his government’s immediate plans around cryptocurrency.
El Salvador became the first country in the world to adopt Bitcoin as legal tender in early September. Due to the protests generated in the country by the decision, Bukele was accused by sectors of the opposition of assuming a repressive attitude against the population.
In response, Bukele himself jokingly called himself a “dictator” through his Twitter (NYSE:TWTR) account. Since then, he has launched a series of projects related to Bitcoin with the aim of his country becoming the main recipient of investments in cryptocurrencies in the region.
Volcano Energy Will Power the City
Bitcoin City will be built in the eastern region of La Unión and will have the Conchagua volcano as its main source of geothermal energy. The government estimates that this project will cost about 300,000 Bitcoins.
Among the benefits mentioned by the controversial 40-year-old president is that the city will not collect taxes, except for the value added tax (VAT).
The city will feature “residential areas, commercial areas, services, museums, entertainment, bars, restaurants, airport, port, railway, all dedicated to Bitcoin,” Bukele said in English to the crowd that followed his words at the Mizata resort.
“Invest here and earn all the money you want. This is a totally green city that works and is energized by a volcano,” added Bukele.
Of the $1 billion that the Salvadoran government hopes to raise from the sale of “Bitcoin bonds” from the treasury, half will go to the construction of the city. The other half will serve to expand the mining infrastructure of the Bitcoin network.
On the other hand, part of the VAT collection will be used to finance the Bitcoin bonds, and the rest will be used to pay for other services such as garbage collection in Bitcoin City.
During his speech, Bukele compared the Bitcoin City project with the cities founded by Alexander the Great.
"If you want Bitcoin to spread around the world, we should build some Alexandrians," he argued. It is expected that early next year, the government will issue the first bonds to finance the city project.
On The Flipside
- The so-called 10-year volcanic bond for a total value of USD 1,000 will have a coupon of 6.5%.
- After the five-year lock on the bond, the government will be able to sell part of the Bitcoins used to finance the bond, and investors will get an “additional coupon,” explained Blockstream’s chief strategy officer, Samson Mow.
- The purpose of this series of projects is “to turn El Salvador into the financial center of the world,” Mow said.
Why You Should Care?
- Bitcoin City is the first and most ambitious real estate project that a government plans to develop in the world.
- The Salvadoran president is increasing his Bitcoin bet even more with this new launch that has caught the eye of many investors.
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