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December 3, 2021
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Bitcoin

El Salvador and the “Bitcoin City” project

El Salvador to create “Bitcoin City”, will use a planned $500 million bonus offer of $1 billion to buy more crypto.

The issuance of the tokenized bond, which was developed by Blockstream, will be processed by Bitfinex.

El Salvador, the only country where bitcoin is legal tender, will build an entire city around the largest cryptocurrency, President Nayib Bukele said in a presentation Saturday night at Bitcoin Week in El Salvador.

Bukele said the planned city in eastern La Union would draw geothermal energy from a volcano and would not charge any taxes other than value-added tax (VAT).

“Invest here and earn all the money you want”.

Said the president.

“This is a totally ecological city that works and is powered by a volcano.”

Half of the VAT collected would be used to finance bonds issued to build the city, and the other half would pay for services like garbage collection, Bukele said, estimating that public infrastructure would cost about 300,000 Bitcoins ($17.7 billion).

Bukele also said that El Salvador plans to issue a “bitcoin bond” $1 billion, a tokenized financial instrument developed by Blockstream, on Liquid Network. Of that amount, $500 million will be used to help build the necessary energy and bitcoin mining infrastructure, and $500 million to buy even more bitcoin. At the cryptocurrency’s recent trading price of around $59,000, this would bring the country’s treasury stock to just under 2,000 bitcoins.

El Salvador plans to enact a securities law and grant a license to Bitfinex Securities to process the issue, Blockstream said in a release.

Although Bukele is a popular president, opinion polls show Salvadorans are skeptical of his love of Bitcoin, and its bumpy introduction has fueled anti-government protests.

Comparing his plan to the cities founded by Alexander the Great, Bukele said the Bitcoin city would be circular, with an airport, residential and commercial areas, and would feature a central square designed to look like a Bitcoin symbol from the air.

El Salvador plans to issue initial bonds in 2022, Bukele said, suggesting it would be in 60 days.

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