El Salvador is planning to build an entire city based on Bitcoin after becoming in September the only country to recognise the world’s largest cryptocurrency as a legal tender. El Salvador’s “Bitcoin City” will be located along the Gulf of Fonseca near a volcano and would be funded with the issuance of a $1 billion Bitcoin Bond, President Nayib Bukele said at the Bitcoin Week, a congregation of crypto experts and enthusiasts, on Saturday.
The Bitcoin city will be built near the Conchagua volcano to tap into the country’s geothermal energy— to power both the city and cryptocurrency mining. The country has already launched a pilot Bitcoin mining venture at another geothermal power plant beside the Tecapa volcano.
El Salvador to build ‘Bitcoin City’, bond offering in 2022
Except for value-added tax (VAT), Bitcoin city residents will be exempt from income, property, capital gains or even payroll taxes. It will also feature residential areas, malls, restaurants and a port, according to Bukele said. “Invest here and earn all the money you want,” Bukele said.
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Half of the VAT will be used to pay the municipal bonds and the rest for municipal infrastructure and maintenance.
The Bukele administration aims to use the project to boost economy and attract foreign investment, according to news agency Reuters.
What are Bitcoin Bonds?
A $1 billion US “Bitcoin bond” would be used to build energy and mining infrastructure, and to buy more Bitcoins.
El Salvador to build ‘Bitcoin City’, bond offering in 2022
The issuance of these bonds will be managed by Blockstream, a Bitcoin services-focused company. The tokenised bond will be available to a number of users in the world that will have access to invest in small amounts as low as $100 dollars, according to statements from Blockstream’s CSO Samson Mow. “Since we’re using the Liquid Network and Blockstream AMP, we’re also able to easily accept investments as small as $100 to democratize access to the bond.”
“We believe this bond has the potential to accelerate hyperBitcoinization and bring about a new financial system built on top of Bitcoin,” Blockstream, the company issuing these bonds, said in a blog post.
