Cryptocurrency is quite literally blowing up in Latin America right now because of a visionary new scheme in El Salvador to mine Bitcoin using energy drawn from an active volcano. Could this bold initiative solve the nation’s chronic poverty and silence crypto’s pesky environmentalist critics?
Earlier this month El Salvadorian president Nayib Bukele tweeted a short video clip unveiling his country’s glossy new geothermal electricity plant. The brief clip also showed engineers receiving delivery of shipping containers full of Bitcoin mining rigs and technicians busily installing application-specific integrated circuits or ASICs. “We’re still testing and installing”, read the presidential tweet, but this is officially the first Bitcoin mining from the volcano.
So what’s actually going on? Back in June 2021, the El Salvadorian parliament passed a law declaring Bitcoin legal tender in the small Central American nation, the country’s other official currency is presently the US dollar. The plan hopes to help El Salvador ride an international fascination with cryptocurrencies and ultimately drive much-needed investment into a nation where 70% of the population lacks basic access to traditional financial services, which means banks. As well as adopting Bitcoin as formal legal tender Bukele’s government also sets out plans to provide the necessary training and mechanisms for Salvadorans to access and engage with transactions involving Bitcoin. And in case anybody was wondering what tiny El Salvador has to offer the world as a futuristic crypto hub, president Bukele offered this tantalizing hint to accompany his June announcement, “I’ve just instructed the president of our state-owned geothermal electric company to put up a plan to offer facilities for Bitcoin mining with very cheap 100% clean 100% renewable zero-emissions energy from our volcanoes.” This is going to evolve fast. As if to underline his commitment to the crypto cause Bukele also changed his Twitter avatar to a doctored photo of himself with laser blue eyes, a popular meme among Bitcoin fanatics.
El Salvador’s argument is that volcanic energy is essentially free. It doesn’t require the burning of fossil fuels and thanks to El Salvador’s geographic location perched on the rim of the so-called Pacific Ring of Fire there’s no shortage of volcanoes. In fact, there are at least 20 active volcanoes within its borders and they already supply about a fifth of the country’s traditional energy requirements to be clear the volcano itself won’t directly power the mining operation instead heat from its scalding molten core will be harnessed to boil water which will, in turn, generate steam that drives turbines.
El Salvador’s progressive approach to Bitcoin has already run into teething problems. On September 6th just one day before it legally adopted the world’s most popular cryptocurrency, El Salvador’s central bank splashed out on 400 Bitcoin worth about 21 million dollars. The following day after the policy was formally rolled out the price of Bitcoin plummeted to its lowest level in nearly a month from around 52,000 to a little under 43,000. Still, according to the country’s shiny new Bitcoin laws businesses have to accept Bitcoin when and where the technology is available citizens aren’t compelled to use Bitcoin if they don’t fancy it but they are incentivized to do so by the government there’s already a state-backed wallet called Chivo and any citizen who downloads Chivo onto their smartphone is instantly rewarded with thirty dollars value in Bitcoin Salvadorans have proudly shared images on Twitter of these crypto windfalls since using the wallet and president Bukele has already declared the scheme a success 2.1 million Salvadorans are actively using Chivo wallet, not downloads, he tweeted, Chivo is not a bank, but in less than three weeks it now has more users than any bank in El Salvador and is moving fast to have more users than all banks in El Salvador combined. This is wild, however the World Bank and the IMF have both expressed scepticism of the rollout arguing that environmental concerns surrounding Bitcoin remain valid for the time being and that cryptocurrencies are still too volatile for nation-states to bet their solvency on them. Doubtful Salvadorans took to social media to suggest that high levels of illiteracy in their nation make its population ripe for online scammers and that the country just isn’t ready to make such a complicated leap into the financial unknown.
Moreover, internet access is spotty with only a small minority enjoying access to up-to-date devices and fast connections. Still, it’s not all doom and gloom, tech firm Athena Bitcoin has publicly committed to investing one million dollars installing as many as one and a half thousand cryptocurrency ATMs across El Salvador. These ATMs would enable citizens to exchange Bitcoin for dollars and vice versa.
The notion of using volcanoes to mine Bitcoin isn’t even all that far-fetched, Iceland already has a proven track record for harnessing geothermal power for its extensive crypto mining activities the proof of El Salvador’s volcanic success will all come down to the efficiency of its miners and whether or not they can offer investors a competitive hash rate.
What do you think will El Salvador’s scheme pave the way for a cleaner greener crypto future?