El Salvador President Bukele Showcases Images of His ‘Bitcoin City’ Plan

Nayib Bukele, the President of El Salvador has presented a layout of the proposed Bitcoin City, which will be constructed near the Conchagua volcano on the Gulf of Fonseca in the south-east of the Central American country. On his Twitter account, Bukele shared pictures of the city’s urbanistic layout accompanied by the caption, which read, “BTC City coming along beautifully.” The project, announced last November, showcases four detailed landmarks said to be built throughout the small Salvadorean municipality of La Unión.

Bukele didn’t provide too many updates in terms of a completion date, but did note that the city will have lots of green trees, along with a blue sea. The scale model also showed a night view, landmarks, and airports.

Furthermore, the model showed a picture of onlookers having a view of the volcano. Bukele had earlier revealed in 2021 plans to use energy from volcanoes for Bitcoin mining. Later in October 2021, the El Salvador President announced that the country’s new volcanic mining facility had mined its first BTC.

To jumpstart the project, Bukele is planning to sell $1 billion (roughly Rs. 7,725 crore) worth of “Bitcoin bonds”. In an unusual financial arrangement, half the proceeds would be invested in Bitcoin, while the remaining half would be spent on infrastructure projects for the new city. Should Bitcoin gain in value over the 10-year life of the bond, bond investors would get half the gains.

Critics pointed out that this arrangement makes little sense, since people who want to invest in Bitcoin can invest directly in Bitcoin and get 100 percent of any gains. But Bukele is counting on the novelty of the bonds — which are slated to be tokenised and sold on a blockchain — to attract investors.

These bonds were initially scheduled to be introduced in March, but the government postponed the debt issuance, citing the economic turmoil caused by Russia’s invasion of Ukraine. El Salvador’s finance minister said that the bonds would be introduced in September at the latest.

That said, if El Salvador fails to improve on its financial position soon, it may become increasingly difficult to issue debt of any kind, since investors will be worried about the risk of an impending default.