The city will be backed by $1 billion in Bitcoin bonds.
President Nayib Bukele announced that El Salvador would build ”Bitcoin City” at Bitcoin Week 2021 last night.
El Salvador Plans Bitcoin City
El Salvador is doubling down on its commitment to Bitcoin.
President Nayib Bukele announced that the Central American country, which introduced Bitcoin as legal tender in September, will be building a city dedicated to Bitcoin in a presentation at Bitcoin Week 2021 last night. El Salvador’s presidential office also tweeted the news following the announcement.
— Casa Presidencial 🇸🇻 (@PresidenciaSV) November 21, 2021
“Bitcoin City” will have its own residential and commercial areas, restaurants, and a plaza, Bukele said. He also confirmed that residents would not be subject to income tax, property tax, capital gains tax, or payroll tax, although they will be required to pay a 10% value added tax to fund construction and services.
The project will initially be funded by $1 billion in Bitcoin bonds, Bukele announced at the event. Of the $1 billion sum, $500 million will go toward building energy and mining infrastructure, and the rest will be used to invest in Bitcoin. The bond will be developed by Blockstream on the Liquid Network, a Bitcoin sidechain that helps scale the network by facilitating faster payments than the base chain.
Detailing the plans for the city, Bukele said:
“In Bitcoin City we will have digital and technological education, geothermal energy for the entire city, and efficient and sustainable public transport”
According to a Blockstream press release, Bitfinex will also be involved in the project, launching a securities platform to host the Bitcoin bonds.
“Bitcoin City” will be located near the Conchagua volcano, and Bukele said the government would build a power plant nearby to provide energy for the city and mining Bitcoin. El Salvador began using its volcanoes to mine Bitcoin soon after the asset was introduced as an official currency.
El Salvador adopted Bitcoin as a legal currency in September to mixed responses. Since the law came into effect, skeptical citizens have protested the move, despite Bukele’s concentrated efforts to promote the asset.