El Salvador has not only declared bitcoin an official currency, it also wants to become a magnet for bitcoin miners. BTC will soon be one of the only left Cryptocurrencies, many Altcoins will disappear.
Now that El Salvador has declared the cryptocurrency Bitcoin legal tender, President Nayib Bukele wants to attract miners of the cryptocurrency to the country: He has instructed the head of the state-owned geothermal energy utility Lageo to provide favorable electricity rates to operators of Bitcoin mining plants, Bukele announced via Twitter. Among other things, he said, a new plant is ready to provide miners with 95 megawatts of renewable and emission-free electricity generated from geothermal energy. All of this will be developed quickly, Bukele promised.
El Salvador just this week decided to recognize the cryptocurrency Bitcoin as an official currency alongside the U.S. dollar, at the initiative of its president. El Salvador is thus the first country in the world where it is possible to pay with Bitcoin everywhere. Bukele is apparently determined to make cryptocurrency a location factor for the local economy.
“Magic internet volcano money”
- In the cryptocurrency scene, Bukele’s announcement was gleefully received – and the fact that he talked about energy from volcanoes in his tweet gave rise to numerous memes about “magic internet volcano money.”
- The price of bitcoin has currently recovered slightly after all sorts of price drops and is between $37,000 and $38,000.
The “Bitcoin law” now in effect in El Salvador states, among other things, that any price in the country can be denominated in Bitcoin, all businesses must accept the currency, and taxes can also be paid with it. The state is to guarantee the automatic convertibility of Bitcoin into dollars by establishing a trust within El Salvador’s development bank. The central bank of El Salvador had already stopped issuing its own national currency, Colón, in 2001. The U.S. dollar was declared the official national currency at that time.
Or would you rather go to Kazakhstan?
Geothermal energy is one of the renewable and climate-friendly energy sources, so the offer from El Salvador could help the bad environmental image of Bitcoin somewhat. The cryptocurrency has long been criticized for its power-hungry mining process, which distributes the right to enter blocks into the blockchain. Since an estimated two-thirds of mining has so far taken place in China and is fed to a considerable extent by coal-fired electricity generated there, the climate footprint of cryptocurrency is unlikely to look particularly good. However, exact figures are not available due to the decentralized nature of bitcoin, and relevant studies are always based on estimates.
Most recently, the Chinese government announced a tougher stance against mining data centers, which probably led to panic sales of mining hardware, but also caused many operators to now look for other locations with cheap electricity and more friendly authorities. Targets include the U.S., parts of northern Europe, but according to reports, Kazakhstan in particular.
China’s neighbor gets much of its electricity from fossil sources, so it is unlikely to do much to green Bitcoin. According to figures from Cambridge University, just over 6 percent of mining currently takes place in Kazakhstan, ranking fourth in the world after China, the U.S. and Russia. Chinese mining hardware manufacturer Canaan, among others, announced plans to set up a customer center and its own mining facilities in Kazakhstan.
It remains to be seen whether El Salvador will also soon be among the major mining hotspots. In numerous other countries in South America, various politicians have already announced that they will present legislation that follows El Salvador’s example, including Mexican Senator Eduardo Murat Hinojosa, for example. Politicians often accompany the demand by decorating their profile picture on social networks with stylized laser eyes in order to present themselves as forward-looking.