El Salvador will build the world’s first “Bitcoin City”: only VAT will be used to generate electricity from volcanic geothermal energy | Blog Post

On November 21, President Nayib Bukele of El Salvador of Central America announced that the country plans to build the world’s first “Bitcoin City” to attract foreign investment. In September of this year, El Salvador officially used Bitcoin as the national legal tender alongside the U.S. dollar.

Booker said that “Bitcoin City” will use volcanic geothermal energy as energy and will not levy any taxes except value-added tax. In addition, El Salvador will issue the world’s first Bitcoin sovereign bond, in which ordinary funds will be converted into Bitcoin, and the other half will be used for the construction of “Bitcoin City”.

Screenshot of related tweets from Bitcoin City.

According to the official Twitter of the President of El Salvador, the world’s first “Bitcoin City” is located in two cities in the country-La Union and Conchagua, the capital of the province of La Union. )between.
The city of Conchagua is located in the territory with an advection volcano of the same name (Volcano Conchagua), located in the southeast of El Salvador. There are active fumarole areas on the two main peaks of the volcano, but there is no confirmed eruption history.

At the closing ceremony of the week-long Bitcoin promotion, El Salvador’s President Booker announced the above news.

President Booker of El Salvador.

President Booker of El Salvador.

“Invest here and earn the money you want.” Booker, wearing white casual clothes and a baseball cap, told attendees in English that this “Bitcoin City” will be “a completely ecological city.”
According to Booker’s description, the government plans to build a power plant next to the volcano to provide energy for the “Bitcoin City” and Bitcoin mining. In addition, only value-added tax will be levied there, and other taxes such as income tax and property tax will be exempted.
Booker said that it is estimated that the cost of public infrastructure in the “Bitcoin City” will be around 300,000 bitcoins (approximately US$17.74 billion).

El Salvador's President Booker at the conference.

El Salvador’s President Booker at the conference.

Booker compares the “Bitcoin City” to a city created by Alexander the Great in the Kingdom of Macedonia. He said that his planned “Bitcoin City” will be circular, with airports, residential areas and commercial areas, and a central square that looks like a Bitcoin symbol from the sky.

Booker also revealed that El Salvador plans to issue the world’s first Bitcoin sovereign bonds-“volcano bonds” in the near future.

Samson Mow, chief strategy officer of Blockstrea, an international blockchain technology provider, subsequently added that the first ten-year issuance of the “volcano bond” is worth $1 billion and is backed by Bitcoin. The fixed interest rate on the bond coupon) is 6.5%.

“This will make El Salvador the world’s financial center.” Samson Mo said that half of the bond funds will be used to buy Bitcoin in the market, and the other half will be used for the construction of the “Bitcoin City” and Bitcoin mining.

Samson Mo also said that after the five-year lock-up period, El Salvador will sell some of the bitcoin used to finance bonds, providing investors with “extra coupons.” He predicted that at the end of the tenth year after the bond issuance, Bitcoin will appreciate sharply, and the annual yield is expected to reach 146%.

On September 7 this year, El Salvador officially adopted Bitcoin as the national legal tender in parallel with the U.S. dollar. On the same day, the government also purchased a total of 400 bitcoins, valued at about 21 million U.S. dollars at the time. Prior to this (June), El Salvador became the first country in the world to announce that it would officially use Bitcoin as a legal currency.

The Western world naturally criticized El Salvador for this action of prying the dollar against the wall. The British Broadcasting Corporation (BBC) reported that the move caused great controversy and confusion. Anti-Bitcoin protests broke out across El Salvador, and even burned Bitcoin ATMs and violent conflicts.

International financial regulators have also expressed legal concerns. In addition to the economic risks caused by Bitcoin fluctuations, the World Bank and the International Monetary Fund (IMF) both stated that making Bitcoin the official currency may make it easier for a country to conduct money laundering and other illegal financial activities.