During El Salvador’s Bitcoin Week closing celebration, President Nayib Bukele announced the construction of Bitcoin City, the first geothermal-powered and nearly tax-free “bitcoiner city”.
Bitcoin City will be exempt from income, capital gains, property, hiring and municipal level taxes, according to the announcement. The only tax that will be charged in the city, clarifies the president, will be value added or VAT. This will be used to “pay the municipality and the rest for the public infrastructure and the maintenance of the city.”
In this way, the Salvadoran government deepens its strategy of attracting private investment to the country by the world’s bitcoiners, by now having greater economic incentives to establish their businesses in El Salvador.
Bukele added that the Bitcoin City, to begin construction next year, will be a CO2-free city. This will be built in the vicinity of a volcano that will be used to power the country. Consequently, geothermal energy will also allow the installation of mining farms throughout the city, with 0 greenhouse gas emissions.
“What will the Bitcoin City include? You will have everything: residential and commercial areas, services, museums, entertainment, bars, restaurants, airport, port, train… everything!”.
Nayib Bukele, President of El Salvador
Bukele even clarified that Bitcoin City will have its own mayor’s office. That is, it will actually have the legal status of a city.
Where will the “Bitcoin City” be located?
Bitcoin City will be located near the town of Conchagua. This is in the Salvadoran region near the Gulf of Fonseca, in the southeast of the country. El Salvador, Honduras and Nicaragua have coasts on this Gulf.
In the Municipality of Conchagua is the homonymous volcano. It does not have a record of eruptive activity but it may be used for geothermal energy generation.
In an initial phase - according to Bukele - Bitcoin City will be given electricity with the “old volcano”. It refers to the Tecapa volcano, which has a geothermal energy generating plant built in 1999. Then it will depend on the Conchagua volcano, which is closer to the city. “This will power the city and the bitcoin mine,” the president explained.
El Salvador wants to be the “Singapore of Latin America”
From the Salvadoran presidential house they celebrated the announcements through a publication on the social network Twitter. There they indicated that El Salvador is projected to become a world benchmark and the “Singapore of Latin America.”
In saying this, they refer to the rapid economic progress that Singapore experienced after 1965, after its independence from the United Kingdom. In a staggered process that accelerated in the 1990s with a stage of economic transformation, the Asian country went from being a poor island to being one of the richest countries in the world.
Bitcoin government bonds
Bukele also made other announcements during his LaBitConf closing presentation. One of them was made in company with Blockstream’s chief strategy officer, Samson Mow: the first bitcoin government bond. It will be called Volcán and will be broadcast on Liquid, a Bitcoin sidechain.
Volcán intends to raise liquidity for USD 1 billion, as announced by Blockstream. This money would be divided in half: USD 500 million will be added to the country’s bitcoin reserves, currently 1,120 bitcoins; and the other USD 500 million for infrastructure for energy and mining.
For Blockstream’s CSO, the launch of these bonds initiates the “nation-state level FOMO”, as countries will compete to launch their own version of this new type of financial instrument, which would have strong implications on adoption and price. of Bitcoin. Anyone can buy the bond for up to a minimum of one hundred dollars.
