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El Salvador will build a “Crypto City” near the volcano

On Saturday, President Nayib Bukele of El Salvador announced El Salvador’s plans to build a “Bitcoin City” near the volcano. The project will be funded by cryptocurrency.

The city will be equipped with everything: residential and commercial areas, services, entertainment, restaurants. It will even have an airport built near the Conchagua Volcano in the southeast of El Salvador.

The Construction work is planned to start in 2022. Surprisingly, the city will not levy taxes except for value-added tax (VAT).

In June, El Salvador passed a law making it the world’s first country to accept Bitcoin as legal tender. However, not all the population supports this initiative.

Thousands of people have protested the new law in September. They have been worrying that the introduction of cryptocurrency might cause instability in this Central American country.

El Salvador has also released Bitcoin wallets allowing citizens to use this cryptocurrency.

Mr. Bukele has not provided a construction or completion date for the city. However, he said that the estimated cost of most of the public infrastructure is about 300,000 bitcoins. The current trading price of a Bitcoin is slightly less than $60,000.

El Salvador plans to cooperate with Blockstream, a digital asset infrastructure company, to raise approximately US$1 billion through “Bitcoin Bonds.”

The government stated that half of the funds would be used to purchase bitcoin. The other 500 million US dollars is planned to be used for energy and mining infrastructure.

El Salvador also stated that they would use the volcano’s geothermal energy to power the mining.

Samson Mow, the chief strategy officer of Blockstream, said that the bond has a five-year lock-up period and aims to withdraw $500 million of Bitcoin from the market during this time.

Blockstream stated that investors in the bond would receive an annual special dividend.

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