El Salvador to build ‘Bitcoin City’, bond offering in 2022

El Salvador President Nayib Bukele announced that his government will build an oceanside “Bitcoin City” at the base of a volcano. He launched his idea in a rock concert-like atmosphere at a gathering of Bitcoin enthusiasts. It was almost the same way as he used a video message to announce that El Salvador would be the first country to make the cryptocurrency legal tender.

Bukele said that a bond offering would happen in 2022 entirely in Bitcoin and 60 days after financing was ready, construction would begin.

The city will be built near the Conchagua volcano to take advantage of geothermal energy to power both the city and Bitcoin mining — the energy-intensive solving of complex mathematical calculations day and night to verify currency transactions.

The oceanside Conchagua volcano sits in southeastern El Salvador on the Gulf of Fonseca.

The government will provide land and infrastructure and work to attract investors.

The only tax that would come into play will be the value-added tax. While one half of the VAT will be used to pay the municipal bonds and the remaining half would be spent toward municipal infrastructure and maintenance.

The president said there would be no property, income or municipal taxes and the city would have zero carbon dioxide emissions.

The city, with an aim to attract investors, will have residential areas, malls, restaurants and a port. Digital education, technology and sustainable public transportation, too, will be part of the city.

“Invest here and earn all the money you want,” Bukele told the cheering crowd in English at the closing of the Latin American Bitcoin and Blockchain Conference being held in El Salvador.

Bitcoin has been legal tender alongside the US dollar since September 7.

Commenting on the lack of transparency of the currency, critics are of the opinion that it will increase criminal activity in the country and the erratic behaviour of the currency would pose a risk to those holding it.

(With inputs from Associated Press)