Update on El Salvador’s Bitcoin Economy
Yesterday we noted that El Salvador had become the first country to adopt bitcoin as a valid and accepted currency which adds bitcoin to the country’s official currency, which has been the US dollar since 2001. As a primarily cash economy (only 30% of the population have bank accounts or access to financial services) this is an unusual place to start a bitcoin based financial system, especially one that is starting with relatively little regulation, but El Salvador’s President has run on a progressive ticket, and many say that bitcoin is about as progressive as you can get.
But it doesn’t end there, as we note that yesterday El Salvador’s President took things one step further and ordered the country’s state-owned geothermal power company LaGeo to develop a plan to provide facilities for bitcoin mining, which on the face of it seems a bit out of place from the companies that might normally build such facilities, which are essentially server farms. That said, he also posted a short video of steam rising from a geothermal well, with the caption, “Our engineers have just dug a new geothermal well that will provide 95MW of 100% clean, zero-emission volcanic geothermal energy. We start designing the entire bitcoin mining hub around that.”
As bitcoin mining consumes a great deal of energy, it has been criticized as a secondary polluter, increasing the need and use of fossil fuels to generate that power and adding to CO2 emissions. Bitcoin mining supporters have been promoting the idea of using renewable energy for bitcoin mining to reduce its environmental impact, but this seems to set a new level of ‘wokeness’ to bitcoin. China’s low-cost energy production has made it the bitcoin mining capital, but tiny El Salvador seems to be rising to the challenge and with a 930 mile active volcano subduction zone down much of the Western Central American isthmus, countries like Guatemala, Honduras, Nicaragua, Costa Rica, and Panama, might see this as a way to boost their economies and follow El Salvador’s lead.
But it doesn’t end there, as we note that yesterday El Salvador’s President took things one step further and ordered the country’s state-owned geothermal power company LaGeo to develop a plan to provide facilities for bitcoin mining, which on the face of it seems a bit out of place from the companies that might normally build such facilities, which are essentially server farms. That said, he also posted a short video of steam rising from a geothermal well, with the caption, “Our engineers have just dug a new geothermal well that will provide 95MW of 100% clean, zero-emission volcanic geothermal energy. We start designing the entire bitcoin mining hub around that.”
As bitcoin mining consumes a great deal of energy, it has been criticized as a secondary polluter, increasing the need and use of fossil fuels to generate that power and adding to CO2 emissions. Bitcoin mining supporters have been promoting the idea of using renewable energy for bitcoin mining to reduce its environmental impact, but this seems to set a new level of ‘wokeness’ to bitcoin. China’s low-cost energy production has made it the bitcoin mining capital, but tiny El Salvador seems to be rising to the challenge and with a 930 mile active volcano subduction zone down much of the Western Central American isthmus, countries like Guatemala, Honduras, Nicaragua, Costa Rica, and Panama, might see this as a way to boost their economies and follow El Salvador’s lead.
New Geothermal Well - Source: LaGeo vis Nayib Bukele@nayibbukele
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