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downloadWhen El Salvador’s president announced in November that a new Bitcoin City would be built on the slopes of the Conchagua volcano, many doubted whether the new city would be powered by geothermal energy from the volcano. According to some experts, the country’s current reserves would not be sufficient to have cheap energy.
Doubts from experts
“Geothermal energy still costs more than oil, otherwise we would already be using more of it. What will end up happening is that we will only buy more oil”.
This is what Ricardo Navarro, a renewable energy expert, said a month ago in an interview with the Telegraph newspaper, describing El Salvador’s choice as uneconomic.
On the other hand, there has been talk for a long time about using renewable energy sources to overcome the problem of the enormous energy consumption for mining cryptocurrencies. And the president of El Salvador, which is the first country in the world to make Bitcoin legal since September, would like to exploit the country’s geothermal reserves.
New resources for El Salvador’s Bitcoin City
A few days ago, Bukele announced that there would be a good chance of finding a well in the vicinity of the volcano where the new city would be built, capable of supplying the entire city on its own.
The president explained how geothermal energy from volcanoes produces more than 1,000 gigawatts for the nation annually, but the state-owned company Lageo, which manages geothermal energy in the country, would be adding new wells.
The president said during a public meeting:
“We have a 90% chance of finding a well (with capacity) to contribute at least 42 MW. Enough to supply power to the entire Bitcoin City”.
But there are still many criticisms of the new Bitcoin City project and the possibility of using energy from volcanoes, like that of economist Steve Hanke, who finds the choice of building the new city on the slopes of a now inactive volcano bizarre.
But Bukele seems intent on continuing along the same path without hesitation. According to the president of El Salvador, the discovery of new wells would make the country self-sufficient in energy, and there would probably be enough energy to mine cryptocurrencies.
A tax-free city
The construction of the new city would be financed by the issuance of a new $1 billion Bitcoin bond. The city will have residential and commercial areas, services, entertainment, restaurants and an airport.
The city, whose construction is expected to begin by April 2022, will be completely tax-free except for value-added tax. Clearly, payments and transfers should be predominantly in cryptocurrencies.