El Salvador President Nayib Bukele is at it again. He announced Saturday his plans to build "Bitcoin City" near a volcano in the Gulf of Fonseca with a $1 billion commitment to establishing crypto mining infrastructure and buying more Bitcoin.
This is Bukele's latest effort to make Bitcoin central to El Salvador's economy. He introduced a law that made the cryptocurrency legal tender in September, and in October, his plan to use volcanic energy to mine Bitcoin finally came to fruition.
El Salvador was also reportedly planning to make it so foreign investors won't have to pay taxes on profits earned via Bitcoin speculation—which is when someone buys some coins and then sells them for a higher price—to appeal to crypto enthusiasts.
CoinDesk reported that Bukele now wants to build "a full-fledged metropolis with residential and commercial areas, restaurants, an airport as well as a port and rail service" and has a massive statue of a Bitcoin symbol in the center plaza.
Bukele also said that "the city will have no income, property, capital gains or payroll taxes," according to the report, presumably because it will support itself via mining Bitcoin. (Although it's not clear how much it would have to mine to stay afloat.)
El Salvador will fund Bitcoin City by issuing a $1 billion "bitcoin bond" on the Liquid Network. The bond will be split down the middle, with $500 million being devoted to building out mining infrastructure and $500 million being used to purchase Bitcoin.
The bond will be issued via Blockstream, which said in a press release:
"We’ve been in talks with El Salvador for months and we’ve put in a massive amount of effort in designing and modeling the bonds. This bond offering is something we think will be attractive to a wide range of investors ranging from cryptocurrency investors, investors seeking yield, HODLers, and ordinary people. We believe this bond has the potential to accelerate hyperbitcoinization and bring about a new financial system built on top of Bitcoin."
El Salvador will hold on to that cryptocurrency for at least five years, at which point it will be sold and a dividend will be paid to bondholders. CoinDesk said Blockstream expects the price of Bitcoin to rise from $60,000 to about $1 million in that time.
So there we have it: In less than a year, El Salvador has made Bitcoin legal tender, committed to mining the cryptocurrency with volcanic energy, and revealed plans to build an entire city devoted to the coin. Never let it be said that 2021 was boring.
