The world’s first bitcoin city built from volcanic energy

El Salvador’s President Nayib Bukele said the Central American country will build the world’s first “bitcoin city”, with initial investment to be raised from the cryptocurrency’s bonds.

According to Reuters news agency, speaking at an event on November 20, Mr. Bukele said the city would be built in the La Union area, east of El Salvador. The city will use geothermal energy from a volcano and it will not levy any other taxes except value added tax (VAT).

Half of the VAT collected will be used to finance the bonds issued to develop this city. The other half will be used to pay for services such as garbage collection.

President Bukele said the “Bitcoin City” would be circular, with an airport, residential and commercial areas and a central square designed to look like the bitcoin symbol when viewed from the air. However, it is not clear exactly when this city will be completed.

Bukele said El Salvador will start raising investment funds from bitcoin bonds when the bonds are issued in 2022.

Blockstream chief strategy officer Samson Mow said that El Salvador will first issue $1 billion worth of bitcoin bonds to raise funds for the aforementioned construction project.

Over the past time, many countries around the world have struggled to find ways to manage cryptocurrencies. China has banned cryptocurrency trading nationwide.

Meanwhile, in September, El Salvador became the first country in the world to accept bitcoin as legal currency in the country.

The World’s First Bitcoin City

Nayib Bukele, the president born in 1981 of El Salvador, intends to build Bitcoin City with an investment of about 1 billion USD.

The plan was announced by Mr. Bukele at Bitcoin Week – an event held this past week to mark El Salvador becoming the first country to recognize the cryptocurrency.

Accordingly, Bitcoin City will be a city with full functions including: residential area, commercial center, restaurant, harbor. It will all revolve around Bitcoin, President Bukele said. The city will also be planned in a circular shape, looking down from the air will see the shape of the Bitcoin coin.

The city is planned to be located on the east side of the La Union area, getting geothermal energy from a volcano. In the city, residents do not have to pay any tax except VAT. This tax will be used to pay for bonds and to build and maintain public infrastructure.

The President of El Salvador plans to issue a $1 billion Bitcoin bond by 2022 to build the city. The bond issuance is backed by two industry giants, the Bitfinex exchange and blockchain services firm Blockstream.

Samson Mao, a representative of Blockstream, said the alliance is confident with calling for investment of $ 1 billion. Bitfinex exchange has many individuals and organizations with assets so large that they can manipulate the market, Blockstream does not see a problem with this amount of bonds worth 1 billion USD.

According to the plan, half of the 1 billion USD will be locked in 5 years, in order to reduce the source of Bitcoin’s circulation and possibly push this cryptocurrency up in price. The participants also expect to have 10 similar cities in other countries, thereby attracting about half of the Bitcoin market.

El Salvador was the first country in the world to recognize the value of Bitcoin in September. The country is said to have purchased around 1,120 BTC. Thanks to the price difference, the BTC brought in a profit of about 12 million USD in early November. This money was used to build about 20 schools and 1 hospital in the country.