President of El Salvador, Nayib Bukele, gestures during his speech at the closing ceremony of the Latin Bitcoin conference (LaBitConf) at Mizata Beach, El Salvador, on November 20, 2021.
Image: Marvin Recinos / AFP
President Nayib Bukele said El Salvador plans to build the world's first "Bitcoin City", powered by a volcano and financed by cryptocurrency bonds.
Bitcoin City "is gonna include everything: residential areas, commercial areas, services, museums, entertainment... airport, port, rail," Bukele said at the Latin American Bitcoin and Blockchain Conference on Saturday.
El Salvador, which has used the US dollar for two decades, was the first country in the world to legalize bitcoin as legal tender.
Bukele said the Conchagua volcano "will power the whole city and will also power the mining."Bitcoin mining
is the process by which new bitcoin is created using computers that solve complex mathematical problems—a process which demands huge amounts of energy.
In El Salvador, some of that energy comes from a geothermal plant fed by the Tecapa volcano.
Bukele said the city would initially be powered by the Tecapa plant before his government builds a new geothermal plant powered by Conchagua.
"Zero Co2 emissions. This is a fully ecological city," Bukele told the crowd.
To fund the project, El Salvador
will issue $1 billion "bitcoin bonds" in 2022, according to Samson Mow, chief strategy officer of Blockstream, a blockchain tech provider.
On stage with Bukele, Mow said half of "volcano bonds" would be invested in bitcoin
, and the other half in infrastructure.
"El Salvador will be the financial center of the world," Mow said.
Bukele said that Bitcoin City will only charge value added tax (VAT).
"We will have zero income tax. Zero percent forever. Zero capital gains tax... zero property tax, zero payroll tax," he said.
No timeline was given for Bitcoin City's construction.