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El Salvador to finance new city with Bitcoins

Robert Besser
28 Nov 2021, 03:40 GMT+10

SAN SALVADOR, El Salvador: El Salvador President Nayib Bukele has announced plans to build a Bitcoin city at the base of a volcano, with cryptocurrency being used to fund the project.

The city will be circular, to represent the shape of a large coin, and will be built in the southeastern region of La Unin, Bukele said, adding that the site will take advantage of the Conchagua volcano's geothermal energy to power Bitcoin mining.

El Salvador recently became the first country to adopt Bitcoin as legal tender, a move that led to protests over fears the cryptocurrency would cause instability and inflation.

On Saturday, Bukele said the planned new city would "include everything residential areas, commercial areas, services, museums, entertainment, bars, restaurants, airport, ports, rail, everything devoted to Bitcoin," as quoted by the New York Post.

He added that the city will have no income tax, only a value added tax, with half of the revenue being spent "to build up the city."

Bitcoin and other cryptocurrencies are mined using sophisticated computers to solve complex mathematical problems, a costly and difficult process that uses large amounts of energy.

Bukele stated that he estimated most of the city's public infrastructure would cost some 300,000 Bitcoins. One Bitcoin is currently trading at just under $60,000.

El Salvador recognizes the virtual currency as legal tender, along with the U.S. dollar.

The government also released a new digital wallet app, and Bitcoin worth $30 was given to every citizen, aimed at encouraging economic development and creating jobs.

However, this move divided the country and meant businesses, when possible, must accept the digital currency as payment.

Bitcoin is a controversial currency, as its value can fluctuate wildly.

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