El Salvador Takes a Lickin’ but Keeps on Tickin’

El Salvador Takes a Lickin’ but Keeps on Tickin’
​

El Salvador is unusual in that it was the first and only one of two countries where Bitcoin has been adopted as legal currency. The country’s President, Nayib Bukele, was the driving force behind the bitcoin adoption, which came into effect on 9/7/21 and the country began purchasing bitcoin immediately and soon released plans to build a ‘bitcoin city’ at the base of the Conchagua Volcano, in order to use the local geothermal energy to power bitcoin mining.  President Bukele indicated today that the country had just bought 80 bitcoin @ $19,000 each (~$1.52m US) and thanked the world for selling it at a low price.  While this might sound like a shrewd purchase, taking advantage of the large decline in bitcoin price, it was one of a number of bitcoin transactions that El Salvador has made, leading to some substantial losses.
As the price of bitcoin fell last month, President Bukele stated that “There are people who are concerned about the price of Bitcoin.  Bitcoin investments are safe. As soon as the bear market ends, the value will increase. Perseverance is the key,” and El Salvador’s finance minister added “…there was no loss because we did not sell any bitcoin,” likely not the most reassuring statement coming from the person who is in charge of the country’s treasury.  While he also noted that Bitcoin accounts for only 0.5% of the country’s assets, that is likely of little consequence to a typical wage earner in El Salvador, who makes $384/week, or even the average worker, who makes $830/week.  So far the Bitcoin currency game has not been a profitable one for the people of El Salvador.