El Salvador plans to create a city entirely dedicated to Bitcoin (BTC). The project will be funded by issuing $1 billion worth of BTC-denominated bonds.
Bitcoin City in El Salvador
El Salvador is currently the only country where Bitcoin (BTC) is legal tender. Despite some protests, the country continues to promote the adoption of BTC. This time, President Nayib Bukele announced the creation of Bitcoin City, a city entirely dedicated to the most famous cryptocurrency.
The president envisions Bitcoin City becoming a fully functional city with residential areas, shopping centers, restaurants, a port, and “everything will revolve around Bitcoin.” In addition, residents will only be subject to value-added tax (VAT), which Bukele says will be used to pay for municipal expenses and city maintenance.
The initiative was first announced by Bukele at El Salvador’s Bitcoin Week conference, which aimed to celebrate the adoption of BTC in the country and increase citizen buy-in. According to the president:
“Within Bitcoin City, we will have digital and Bitcoin-oriented education. Geothermal energy for the entire city and efficient and sustainable public transportation.”
Indeed, El Salvador’s president had said last summer that he would use the country’s volcanoes to mine BTC via “100% clean, 100% renewable, emission-free energy.”
BTC bonds to finance the project
In order to finance the project, El Salvador could issue Bitcoin-denominated bonds via Blockstream’s Liquid Network. Indeed, the government of El Salvador has reached an agreement with the exchange Bitfinex and the company Blockstream to issue bonds worth $1 billion. In an announcement on Twitter:
“El Salvador is ready to issue BTC bonds to accelerate hyperbitcoinization and implement a new Bitcoin-centric financial system.”
Blockstream says the funding will be divided into two parts. $500 million will be spent on building infrastructure. The second part worth $500 million will be locked up for five years.
The Salvadoran president further stated that the bonds will be available during 2022.