A volcano-powered Bitcoin City will be partially funded by $1 billion in government-issued, dollar-denominated bitcoin bonds issued through Blockstream’s Liquid Network, a Bitcoin Mainnet sidechain.
El Salvador’s President, Nayib Bukele, is still bullish on cryptocurrency, announcing the construction of a “Bitcoin City” free of income and property taxes. The construction of the city will be funded by government bitcoin bonds issued through Blockstream’s Liquid Network and, later, a value-added tax.
The 10-year bonds will be issued by the president in early 2022. Bondholders who do not have citizenship will have the process of obtaining citizenship accelerated. The bonds would be locked up for five years, increasing bitcoin scarcity and driving up the price. The bonds will be worth $1 billion, and bondholders will receive a 6.5 percent coupon. Following the sale of the bitcoins after five years, $500 million will be used to purchase bitcoins, with additional dividends paid to investors. El Salvador will appoint Bitfinex as the bond’s bookrunner. A book runner is a coordinating entity in the bond’s issuance.
El Salvador’s Bitcoin Adoption is Growing
$500 million will be spent to build infrastructure to power bitcoin with geothermal energy in La Union, El Salvador’s easternmost region. When viewed from above, the city will have a plaza that will resemble a bitcoin symbol.
When bitcoin was made legal tender, it had supporters and detractors, and there were numerous technical glitches on the first day. The state now owns a minimum of 1100 shares, having bought into the recent drop, as it did in September 2021. Merchants were initially hesitant to accept bitcoin for goods and services, with only 7% set up to receive bitcoin as of early October this year. McDonald’s and Starbucks were among the first merchants to accept bitcoin in El Salvador.
Bitcoin Week Attracts a Wide Range of Bulls
During Bitcoin Week in San Salvador, El Salvador’s capital city, Blockstream’s Samson Mow pitched the government the idea of issuing bitcoin bonds. Bitcoin attracted a diverse range of supporters, including Jose Schierano, a 51-year-old Argentinian entrepreneur who has attended multiple conferences to hear panelists speak. Yessenia Correa, a 30-year-old South American singer who attended, has been speculating on price swings since 2015, using the proceeds to pay for her education. Jessie Rodriguez, a Colombian programmer who immediately converts remuneration from foreign projects into bitcoin, was also present at Bitcoin Week and hopes that his home country will soon adopt bitcoin in the same way that El Salvador has.
His hopes are well-placed, with Colombia leading the way in Latin America in terms of the number of bitcoin ATMs before El Salvador’s president declared bitcoin legal tender earlier this year. The majority of ATMs in Colombia are located in the capital, Bogota.