Bitcoin in El Salvador: a 3-month balance sheet
Photo: Pixabay
Salvadorans completed in December a quarter of the adoption of the crypto-asset that in October reached highs above 66,000 dollars per unit. In addition, during this period, the government started mining with renewable energy and announced the creation of the so-called "Bitcoin City."
A little over three months after becoming legal tender in El Salvador, the first country in the world to give it that status, bitcoin continues to be the prey of philias and phobias. In November, Salvadoran President, Nayib Bukele, announced the creation of what he called Bitcoin City, a city around a volcano, from which bitcoin would get geothermal energy, with residential areas, shopping malls, restaurants, and a port, where only VAT would be charged to investors and all transactions would be carried out with bitcoin.
He also announced that the government is preparing a bitcoin bond issue to finance this project in Conchagua, designed by Mexican architect Fernando Romero. Bukele also took advantage of a drop in the currency at the end of November to gain 100 bitcoins, without forgetting that just on December 21 he bought 21 more units, with which it is calculated that he already accumulates 1,391 bitcoins.
In the quarterly balance, it should be noted that in October, those who received their “Chivo Wallet” with a percentage of bitcoin increased their profits by 39.90% thanks to the strength of the cryptocurrency, after the start-up of their future investment fund (ProShares Bitcoin Strategy ETF) in the New York market.
For Eloisa Cadenas, crypto-asset specialist and founder of Cryptofintech consulting firm, which advises companies on these issues, there are several highlights in the balance sheet.
"Derived from the new all-time highs, which were at $66,000 [as of October 21], there was a significant gain. For example, the president [Nayib Bukele], who bought 400 bitcoins, already made a 40% gain in one month," he comments.
Meanwhile, the trust that guarantees the liquidity in the bitcoin exchange transaction (Fidebitcoin for its acronym in Spanish), reported a surplus of 4 million dollars "just because of a market issue."
The expert refers to another point noted on this subject in favor of El Salvador, whose government mined bitcoin with renewable sources, such as geothermal energy.
Although El Salvador is a country with high potential in this resource, the reality is that "it is widely underutilized", according to the Renewable Energy Readiness Assessment: El Salvador, by the International Renewable Energy Agency (IRENA for its acronym in Spanish).
For now, El Salvador has two geothermal power plants (Ahuachapán and Berlín) with an installed capacity of 20.4 MW and a production equivalent to 21.8% of electrical energy, according to LaGeo, the state-owned company that manages the resource and is seeking to develop two more fields: San Vicente and Chinameca.
Eloisa Cadenas recalls that crypto-asset mining is noted for its high energy consumption. She refers to the exile of miners from China, a country where this activity is prohibited, so they have migrated to Canada, India, and El Salvador, the latter country "is having this opening for bitcoin-based businesses to develop without feeling that they are chasing you".
For the expert, with all the questionable issues surrounding the adoption of bitcoin in El Salvador, something undeniable is that this has put in the public debate the adoption of these mechanisms throughout the region, opening the opportunity for a deeper issue: financial education in Latin America, which is a breakthrough for the region and places El Salvador with an advantage.
Source: Acosta, A. (2021, December 28). El bitcoin en El Salvador, un balance a 3 meses. Forbes Centroamérica. Retrieved January 3, 2022, from https://forbescentroamerica.com/2021/12/28/el-bitcoin-en-el-salvador/
