El Salvador aims to build a “Bitcoin City” near a volcano that will be funded by the cryptocurrency, according to President Nayib Bukele.
The city, which would be built near the Conchagua volcano in south-eastern El Salvador, will have residential and business areas, services, entertainment, restaurants, and an airport.
The development will start in 2022, and the city will be tax-free save for the VAT (VAT).
El Salvador became the first country in the world to accept bitcoin as legal cash when it passed a law in June. However, not everyone in the city supports the move.
Thousands of people took to the streets in September to protest the bill, claiming that the cryptocurrency’s introduction will cause instability in the Central American country.
A bitcoin wallet has also been opened in the country, allowing citizens to utilise the cryptocurrency.
El Salvador, on the other hand, wants to raise around $1 billion through a “Bitcoin Bond” in collaboration with Blockstream, a digital assets infrastructure firm. According to the government, half of the cash would be used to purchase bitcoin, with the remaining $500 million going toward energy and bitcoin mining equipment.
Mining is the time-consuming and energy-intensive process of generating new bitcoins by solving cryptographic challenges. El Salvador has stated that it intends to power this with geothermal energy from the volcano.
According to Samson Mow, chief strategy officer at Blockstream, the bond has a five-year lock-up period and is intended to take $500 million in bitcoin off the market during that time.
According to Blockstream, bondholders will receive an annual special dividend.