El Salvador aims to establish the world’s first “Bitcoin City,” first funded by Bitcoin-backed bonds, according to President Nayib Bukele, who is betting big on the cryptocurrency to boost investment in the Central American country, Reported the Al Jazeera.
Bukele claimed the city planned in the eastern district of La Union would get geothermal power from a volcano and would not collect any taxes except the value-added tax during an event that wrapped up a week-long promotion of Bitcoin in El Salvador (VAT).
Earlier this year, the country made news when it became the first country in the world to accept bitcoin as legal cash. Before announcing its bitcoin acceptance in September, the country purchased $26 million in digital currency. Residents may now use the digital asset to pay taxes, buy homes, and buy goods and services.
Near the base of the Colchagua volcano, a new “bitcoin city” will be built in the shape of a coin. Bitcoin mining will be powered by geothermal energy throughout the city. El Salvador will raise a billion-dollar “bitcoin bond” with the help of crypto infrastructure provider Blockstream to commence construction of the city. The bond will be used to expand up the city with $500 million, while the remaining $500 million will be used to purchase bitcoin.
Bukele estimated that the public infrastructure would cost around 300,000 Bitcoins ($17.7 billion) and that half of the VAT would be used to fund the bonds issued to develop the city, and the other half would be used to pay for services such as garbage collection.
Despite the fact that Bukele is a popular president, opinion polls reveal that Salvadorans are skeptical of his enthusiasm for Bitcoin, and its rocky rollout has fuelled anti-government protests.
Bukele claimed Bitcoin City would be circular, with an airport, residential and commercial sections, and a central plaza designed to look like a Bitcoin symbol from the air, like towns created by Alexander the Great.
“We need to create several Alexandria if you want Bitcoin to expand over the world,” said Bukele, a tech-savvy 40-year-old who in September declared himself “dictator” of El Salvador on Twitter in an apparent joke.
Critics have argued that attaching a country’s fate to such a volatile asset class is hazardous, but supporters argue that bitcoin is allowing ordinary people access to the financial markets.