The flagship project of the bitcoin-loving president is being developed in the shadow of a volcano. According to President Nayib Bukele, the construction of Bitcoin City in El Salvador will start later in the year. The El Salvador president has published what the yet-to-be-built Bitcoin City will look like, adding that its development is “coming along beautifully”.
President Bukele posted various pictures of a scale model of the crypto-powered city that will be built near the Conchagua volcano on the Gulf of Fonseca in the southeast of the Central American nation. That is a flagship project for the bitcoin-adoring president, who is one of the most prominent advocations of this digital currency.
The introduction of the architectural designs and preview images of Bitcoin City comes amid a major slump for the crypto market that has dropped in value by over 50% since its all-time high in November 2021.
El Salvador became the first nation in the world to adopt bitcoin as an official currency in 2021. Since then, it has invested millions of dollars of government funds into the crypto, making the latest purchase on May 9 when Bitcoin was trading at around $30,000.
President Nayib Bukele tweeted that El Salvador had ‘just bought the dip’, buying another 500 coins for around $15 million. The nation now has 2,301 coins acquired at an average price of $36,585.
Bitcoin City was first announced at the Latin American Bitcoin and Blockchain Conference around six months ago. Today, it is being built with the hope of encouraging some economic growth and attracting significant foreign investment.
There will be no property, income, or even municipal taxes, nor will it produce any carbon dioxide emissions, with some enthusiasts describing it as a ‘crypto utopia’. Geothermal energy from the volcano will be mainly used to power the city, and mine bitcoin, in a process that is energy-intensive for the generation of new units of the crypto.
— Nayib Bukele (@nayibbukele) May 10, 2022
But, it is still in the early days of this ambitious nationwide crypto experiment, with its roll-out now proving divisive among the citizens.
A recent survey conducted by the US-based National Bureau of Economic Research indicated that just 20% of Salvadorans are paying for services and goods using bitcoin, with a majority relying on the US dollar.
The International Monetary Fund (IMF) has also insisted that adopting bitcoin as legal tender:
“Entails large risks for financial and market integrity, financial stability, and consumer protection”
The bitcoin price has swung wildly in the 12 months since President Nayib Bukele stated that his nation would adopt the crypto as an official currency.
Bitcoin’s volatility is among the main arguments against using it as a daily currency, with the price fluctuations in the past year seeing it swing between $29,000 and $69,000 compared to the US dollar.
Despite the IMF’s warnings, the Central African Republic embraced bitcoin in April by making it an official currency becoming the second country globally to do that after El Salvador.