EL SALVADOR is now drilling tunnels into its many volcanos to build geothermal bitcoin mining stations as the central American nation makes the cryptocurrency legal tender.
The nation became the first country in the world to adopt bitcoin as legal tender at the beginning of June. El Salvador’s president Nayib Bukele responded to the ratification of the ‘bitcoin law’ in the nation’s congress by stating on Twitter: “This is going to evolve fast!” Now the president has instructed the geothermal energy sector to utilise the nation’s 22 major volcanos to power “bitcoin mining hubs”.
The president of El Salvador Nayib Bukele tweeted: “Our engineers just informed me that they dug a new well, that will provide approximately 95MW of 100 percent clean, zero-emissions geothermal energy from our volcanos Volcano.
“Starting to design a full Bitcoin mining hub around it.”
The initiative could see El Salvador make revenues in excess of “$250 million per year”.
George Kikvadze of the Global Blockchain Business Council responded to the tweet and said: “Dear President Nayib Bukele, 95MW can generate 3 Exahashes which is around 600 bitcoin in revenue per month or $250 mln per year.
“I am confident with these metrics you can structure a proper JV with credible investors and take care of IMF once and for all.”
Speaking about El Salvador’s move bitcoin pioneer Max Keiser told Express.co.uk: “Bitcoin was designed to be a central bank killer.
“The IMF will probably be the first to go.
“I’ve advised El Salvador to create new ‘Volcano Bonds’ backed by future bitcoin mining revenues to recapitalise their balance sheet and retire the IMF loans.
“I know of two banks in New York that are working on this now.
“Property prices in El Salvador are set to triple this decade as several countries in the region; Argentina, Guatemala, Paraguay and others will announce shortly they are following El Salvador’s example.
“Other central banks such as the Bank of England and the Federal Reserve Bank in America are also at risk of being disintermediated as bitcoin rises to become the world’s reserve currency.”
Mr Keiser has suggested ‘Volcano Bonds’ should be floated to finance El Salvador’s geothermal bitcoin mining operations.
He tweeted to the CEO of Galaxy Investment Partners: “What about you guys floating $1 billion in ‘Volcano Bonds’, backed by future bitcoin mining output for El Salvador to pay off the IMF.”
It was not long before finance giant JP Morgan took notice of events and warned that El Salvador’s decision to adopt bitcoin as legal tender will jeopardise its negotiations with the International Monetary Fund, IMF.
Commenting on the move, the JPMorgan client note stated: “As with the dollarisation in the early-2000s, this move does not seem motivated by stability concerns, but rather is growth-oriented.
“But it is difficult to see any tangible economic benefits associated with adopting bitcoin as a second form of legal tender, and it may imperil negotiations with the IMF.”
Responding to the news, George from Cryptosrus said major financial institutions such as JP Morgan are criticising the move by El Salvador because “they want to maintain their power”.
He added global financial institutions were “going after El Salvador for trying to free itself from the International Monetary Fund, IMF”.
El Salvador is currently talking to the IMF about securing a $1.3 billion loan to revitalise its economy.
This will then add to El Salvador’s current outstanding IMF debt of $7.7 billion.
In 2001, the nation switched from using its former currency, the colón, to official use of the US dollar.
However, financial experts pointed to this switch as leaving the country financially susceptible during the downturn experienced due to the coronavirus caused monetary crisis.
El Salvador is very susceptible if the dollar goes inflationary due to money printing by the US Federal Reserve.
One Twitter commentator suggested that El Salvador is “the first country to vaccinate its citizens against hyperinflation” because of its adoption of bitcoin.