• The announcement was made by President Nayib Bukele at Week’s end, an event where the government displayed its accomplishments and announced new plans for cryptocurrency.
• Project will be completely funded by Bitcoins. Bonds backed with cryptocurrency will also be issued by the government.
• It will be the world’s first green city financed with Bitcoins and powered by geothermal energy.

El Salvador President Nayib Bukele announced the construction of the world’s first “Bitcoin City.” The novel real estate project will be financed with bonds backed by Bitcoins and aims to raise about 1 billion dollars.

During the closing speech of the Bitcoin Week that brought together enthusiasts, investors, and industry experts, the Central American president took the opportunity to talk about his government’s immediate plans around cryptocurrency.

El Salvador, the country that adopted Bitcoin as its legal currency in September 2017, was the first in the world. Bukele was accused of taking a hardline stance against the people after protests were triggered by the decision.

In response, Bukele himself jokingly called himself a “dictator” through his Twitter (NYSE:) account. He has since launched several projects that are related to Bitcoin, with the goal of making his country the largest recipient of investments made in cryptocurrency in the region.

Volcano Energy Will Provide Power for the City

Bitcoin City will be built in the eastern region of La Unión and will have the Conchagua volcano as its main source of geothermal energy. This project is estimated to cost around 300,000. Bitcoins by the government.

The controversial, 40-year old president mentioned that taxes will be collected by the city except for value added tax (VAT).

The city will feature “residential areas, commercial areas, services, museums, entertainment, bars, restaurants, airport, port, railway, all dedicated to Bitcoin,” Bukele said in English to the crowd that followed his words at the Mizata resort.

“Invest here and earn all the money you want. This is a totally green city that works and is energized by a volcano,” added Bukele.

Of the $1 billion that the Salvadoran government hopes to raise from the sale of “Bitcoin bonds” from the treasury, half will go to the construction of the city. Other funds will go to expanding the Bitcoin network’s mining infrastructure.

The VAT will also be used for financing Bitcoin bonds. However, some of it will also be used to fund other services, such as the garbage collection in Bitcoin City.

Bukele, during his speech, compared Bitcoin City to the Alexander the Great-founded cities.

“If Bitcoin is to be spread throughout the world, then we need some Alexandrians.”
He said so. The government is likely to issue its first bond in the early part of next year for financing the project.

Flipside

• A coupon of 6.5% will be included in the so-called 10 year volcanic bond with a total worth of USD 1000.
• After the five-year lock on the bond, the government will be able to sell part of the Bitcoins used to finance the bond, and investors will get an “additional coupon,” explained Blockstream’s chief strategy officer, Samson Mow.
• The purpose of this series of projects is “to turn El Salvador into the financial center of the world,” Mow said.

What are the reasons to care?

• Bitcoin City will be the most ambitious and innovative real estate development that any government in the world plans.
• With this launch, the Salvadoran president has increased his Bitcoin betting with a new initiative that caught the eye many investors.

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