We constructed this metropolis, and we built it on Bitcoin.
El Salvador aims to construct a whole city centred on Bitcoin, despite becoming the first country to accept the cryptocurrency as legal tender. It will, of course, be in the shape of a coin and will be located at the base of the Conchagua volcano in order to harness geothermal energy to power the city and its Bitcoin mining activities.
El Salvador president Nayib Bukele unveiled plans to build the “Bitcoin City” along the Gulf of Fonseca, between La Unión and Conchagua. Speaking at a promotional Bitcoin event in the coastal town of Mizata late on Saturday, Bukele said it would include residential areas, commercial areas, services, museums, entertainment, bars, restaurants, airport, port, rail – “everything devoted to Bitcoin.”
¡El Salvador será el primer país del mundo en tener una #BitcoinCity!
Estará entre la ciudad de La Unión y Conchagua. Las personas podrán vivir en La Unión pero trabajar en la #BitcoinCity. Pronto empezarán a ver todos los beneficios, cuando el desarrollo y la inversión llegue. pic.twitter.com/21bx7Yc5aJ
— Casa Presidencial 🇸🇻 (@PresidenciaSV) November 21, 2021
In the center of this crypto-metropolis will be a plaza featuring a huge Bitcoin symbol. Moreover, the city will have no income, property, capital gains, or payroll taxes, just value added tax. Bukele said revenue gained from this would be used to “to build up the city,” while the rest would be used to keep the streets “neat and clean,” reports the BBC.
Bukele never gave a timeframe for the city’s construction, though he did say that most of the public infrastructure would cost around 300,000 Bitcoins, which, at BTC’s current price, would be equal to $17.2 billion. The president also revealed plans to issue a $1 billion US “Bitcoin bond” developed by Blockstream. Half the money will go toward energy and bitcoin mining infrastructure, and half used to buy more Bitcoin, bringing the total number of Bitcoins EL Salvador owns to just under 2,000.
Blockstream’s chief strategy officer Samson Mow said the bonds, known as “volcano bonds,” would be worth $1 billion, backed by Bitcoin, and carry a coupon of 6.5% initially. El Salvador will start to sell some of its cryptocurrency holdings after a five-year lockup and pay an extra dividend to bondholders. “This is going to make El Salvador the financial center of the world,” said Mow.
Once 10 volcano bonds were issued, $5 billion in Bitcoin would be taken off the market for several years, said Mow via Reuters. “And if you get 100 more countries to do these bonds, that’s half of Bitcoin’s market cap right there.”
El Salvador became the first country to adopt Bitcoin as an official currency in early September. Things didn’t go quite as planned when BTC’s price fell by $10,000, but Bukele took advantage of the drop to buy the dip and purchase 150 more Bitcoins. There were also problems with the country’s wallet system on its debut.
El Salvador has already started mining BTC using clean, zero-emission geothermal power generated by its “Volcanode” plant, another part of its plan to become the most crypto-friendly country in the world.