The Latin American country El Salvador has announced its plans to launch the world’s first ‘Bitcoin City’. Country President Nayib Bukele took the center stage at an event on Saturday, November 20.
As per the announcement, Bitcoin City will be initially funded by Bitcoin bonds. Besides, the city planned to the east of the country will get its energy supply from the volcano and won’t levy any taxes except the value-added tax (VAT).
Well, Bitcoin maximalist Max Keiser deserves a special mention on this occasion as he was the first to propose this idea back in June 2021. Back then he said that floating Bitcoin ‘Volcano Bonds’ could help the country to retire from the IMF loans.
As per the available details, El Salvador is planning to issue $1 billion in tokenized USD-denominated 10-year bonds. “We’ll start funding in 2022, the bonds will be available in 2022,” said Bukele.
However, Bukele has tapped into two big players – Blockstream and Bitfinex – to issue these bonds. Speaking alongside Bukele, Samson Mow, chief strategy officer of Blockstream said that the binds will pay 6.5% via the Liquid network.
Interestingly, half of the “volcano bonds” shall be converted into Bitcoin and the remaining half shall be used for infrastructure and developing the Bitcoin mining facility powered by geothermal energy.
Mow further explained that after a five-year lockup, the government will start selling Bitcoins and pay an additional dividend to investors. As per the Blockstream model, at the end of the 10-year, the annual projected yield could be close to 150% considering Bitcoin’s projected appreciation.
Mow further noted that this plan will help El Salvador become the Singapore of Latin America. “The first countries that do this will have a massive advantage. This is the beginning of nation state Bitcoin FOMO,” Mow said, referring to “fear of missing out”.
The Bitcoin City infrastructure will be built near Conchagua Volcano which will help to provide energy for mining.
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