El Salvador, the only country where bitcoin can be used as a legal tender, is planning to build a city based on the cryptocurrency. This was announced by President Nayib Bukele at Bitcoin Week in the country.
The Bitcoin City will be funded initially by $1 billion Bitcoin bonds.
Not only will cryptocurrency be used to fund the project, the Bitcoin City will also be circular in shape like a coin and will be built at the base of a volcano in the south-eastern region of La Unión.
President Bukele said that the site would take advantage of the Conchagua volcano’s geothermal energy to power Bitcoin mining.
Addressing a large crowd at the Bitcoin event in the town of Mizata, Bukele said the planned new city would “include everything – residential areas, commercial areas, services, museums, entertainment, bars, restaurants, airport, port, rail – everything devoted to Bitcoin.”
The city center will be a plaza that will be built around a huge bitcoin symbol. The city will have no income, property, capital gains or payroll taxes.
“In #BitcoinCity we will have digital and technological education. Geothermal energy for the entire city and efficient and sustainable public transport,” a presidential tweet added.
Bukele said El Salvador plans on issuing $1 billion US ‘Bitcoin bond’, a tokenised financial instrument developed by Blockstream. Of that amount, $500 million will be used to help construct needed energy and bitcoin mining infrastructure and $500 million to buy even more bitcoin.
El Salvador intends to create a securities law and grant a license to Bitfinex Securities to process the issuance, Blockstream said in a release.
At the conference, Blockstream’s chief security officer Samson Mao told the audience that the $1 billion in tokenised bonds will be 10-year US-dollar denominated and pay 6.5% initially. Following a lock-up period of five years, El Salvador will start to sell its cryptocurrency holdings and pay an added dividend to bond holders.
Bukele did not give any specific timelines for the project, but said he estimated that the public infrastructure would cost around 300,000 Bitcoins (1BTC = USD57,560/AED211,420).
