Did Bitcoin Contribute In Nayib Bukele And El Salvador Abandoning External Debt?

El Salvador will no longer use external debt to finance its national budget starting in 2025. The country’s President, Nayib Bukele, announced this during his Independence Day address on September 15. The country’s Bitcoin strategy could have played a significant role in this development as it moves towards attaining financial freedom.

El Salvador Will Not Need External Debt From 2025

Bukele announced during his Independence Day address, broadcast on the X platform, that his government would present a 2025 budget that would not borrow any external debt. Stacy Herbert, the Director of the country’s national Bitcoin Office, highlighted this development in an X post while noting that El Salvador was on a path to “true freedom.”

President Nayib Bukele Bitcoin’s bet is believed to have significantly contributed to the country’s achievement of this milestone. Herbert alluded to how Ark Invest’s CEO Cathie Wood had, in May, predicted that the country’s GDP would increase tenfold in the next five years thanks to the President leveraging Bitcoin as a major reserve asset.

Cathie Wood also mentioned that Bukele leveraging AI could help the country achieve this feat. Nayib Bukele already looks to be working on that, as he recently met with Elon Musk, where they discussed how AI technology could affect the world. Therefore, the El Salvador President could be looking to integrate AI in certain sectors of the country.

How The Country Is Leveraging Bitcoin To Boost Its Economy

In September 2021, El Salvador became the first country to adopt BTC as a legal tender, which paved the way for President Nayib Bukele’s Bitcoin bet. In November 2022, the government announced its ‘1 BTC a day’ initiative, whereby they purchase one Bitcoin daily. Data from Arkham Intelligence shows that they currently hold 5,880 BTC ($369 million).

Besides purchasing Bitcoin, the country has also added to its BTC holdings through mining. It is known for using volcano-fueled geothermal energy to power its mining operations. This is more cost-effective than relying on electricity for these Bitcoin mining operations.

The government is also using BTC to attract foreign investments. In June earlier this year, Bukele proposed the creation of private Bitcoin banks. These banks are meant to provide an easier way for investors to access the flagship crypto, as fewer restrictions will apply to them than to traditional banks.

Bitcoin Is The Way To Go

Holding Bitcoin has undoubtedly continued to provide investors an edge, as evident with El Salvador. Like President Nayib Bukele, Microstrategy’s co-founder Micheal Saylor is another person who has taken a massive bet on the flagship crypto, which is already paying off. For context, the MSTR stock has been one of the best-performing equities since Saylor and his company adopted the ‘Bitcoin Strategy’ in 2020.

Since 2020, the software company has been buying and including BTC on its balance sheet. On September 20, Saylor announced that Microstrategy purchased 7,420 BTC ($458.2 million) just a week after he announced that the company bought Bitcoin worth $1.11 billion, its largest single purchase.

Meanwhile, President Donald Trump could implement El Salvador’s strategy as he has promised to create a strategic Bitcoin reserve if elected. Interestingly, the US is currently the country with the largest holdings, with 203,239 BTC ($11.91 billion) held by the government. However, these coins have been from seizures, including the proceeds from the dark web marketplace Silk Road.