El Salvador was the first country to recognize Bitcoin as legal tender a few weeks ago. It spent $225 million to increase its government stockpile by 550 Bitcoins in a rollout to make it a global leader in cryptocurrency. President and right-wing populist Nayib Bukel tweeted Friday that the Bitcoin mining operation managed by LaGeo SA de CV, a state-owned energy company, had generated $269 in Bitcoin from geothermal power from volcanoes.
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Bukele tweeted Friday morning that while the government was still installing and testing, the #volcanode was now operational. This follows a tweet by the president earlier this week that showed government-branded shipping containers transporting ASIC miners to an energy facility located in a jungle. LaGeo technicians will install it.
CNBC pointed out that while using geothermal energy for cryptocurrency creation is not new, international attention has been drawn to the huge amounts of electricity Bitcoin and other cryptocurrencies use to power their blockchains. According to the New York Times estimate, Bitcoin consumes 91 terawatt hours of electricity per year, which is just under half of global generation. About 25% of El Salvador's energy comes from geothermal plants. The Bukeles initiative aims to capitalize on this boom and maintain an eco-friendly image.
El Salvador's government has set up a Bitcoin wallet called Chivo that is open to all citizens who have a national ID card. Once registered, they will be able to receive $30 worth of Bitcoin. This is a huge amount considering that El Salvador's per capita national gross income was around $3,600 in 2020.
We believe this is a sign of times to come. However, many El Salvadorans are skeptical about whether jumping on the Bitcoin train is a good idea. It ties the country's economy to cryptocurrency prices that fluctuate greatly and could expose it to speculation in global markets. CNBC reported previously that 70% of respondents to a Central American University poll disapprove of making Bitcoin legal tender. Many of the polled had little or no knowledge of Bitcoin.
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According to the Associated Press on Wednesday, protests broke out in San Salvador's capital. Protestors were speaking out against the Bukele administration's undemocratic concentrations of power. Many protestors were dissatisfied with his Bitcoin policies. The Associated Press noted that some marchers wore NO To Bitcoin shirts. A few people vandalized some 200 government-run cryptocurrency ATMs in El Salvador. However, the AP pointed out that the network was already largely unfunctional during the week that Chivo was overwhelmed with the number of new registrants and the glitches in its government-created app.
Ricardo Castaeda, senior economist at Central American Institute for Fiscal Studies, said that the government has been betting more than $200,000,000 in a virtual casino. This is taxpayer money.
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Jorge Hasbn is the owner of several clothing stores and heads El Salvadors Chamber of Commerce and Industry. He told the paper that the three-month rollout of the Bukeles government under which the new tender was introduced was too fast and didn't give businesses enough time to prepare for the rollout. He said that the government failed to establish a proper regulatory system before pushing cryptocurrency legislation through the doors.
Hasbn stated to the Journal that if a client wants to pay bitcoin, I'm not ready. Although we could have enjoyed the wave in a positive manner, the way that the law was implemented wasn't favorable.
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On Friday, Bitcoin and many other cryptocurrencies saw a surge in prices. Just after 5:00 p.m. ET, the price of Bitcoin had risen by over $48,100. ET: Bitcoin's price was at $48,100 as of shortly after 5:00 p.m. ET, an increase of over $4,300 over the previous day.
Similar ambitions are held by other politicians in the US. According to Francis Suarez, Miami's Republican Mayor, Friday's announcement by the Washington Post that a city-run program called MiamiCoin had already brought in $7 million since its August rollout. Suarez suggested that MiamiCoin could transform the city into a tax-free, libertarian paradise in the future.
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It is amazing to think of the possibility that a government could be run without citizens paying taxes. Suarez said that it was amazing.
