El Salvador president announces plan to create a “Bitcoin City” that will be backed by bitcoin bonds and powered by a nearby volcano.
Cannot see any possible way this might go wrong. pic.twitter.com/c3ioxo5BFj
— ian bremmer (@ianbremmer) November 22, 2021
El Salvador plans to build the world's first 'Bitcoin City' with money from a $1 billion bitcoin-backed bond, President Nayib Bukele said.
— Reuters (@Reuters) November 23, 2021
Yes, that is Presiden Bukele, in person. Speaking of a country ‘so far from God, so close to the United States’:
… Bukele said El Salvador planned to issue the bond in 2022, suggesting it could be as soon as in 60 days time.
Half of the $1 billion sum would be converted to bitcoin and the other half used for infrastructure and bitcoin mining.
Samson Mow, chief strategy officer of blockchain technology company Blockstream who was on stage with Bukele said that the ‘volcano bonds’ – the new city will be powered with geothermal energy from a nearby volcano – will be U.S. dollar-denominated 10-year bonds and carry a coupon of 6.5%.
That is well below the 13.5% interest rate yield El Salvador’s 10-year bonds are currently trading at. The premium investors demand to hold El Salvador bonds rather than ultra-safe U.S. government bonds has also more than doubled since June when Bukele’s push to make bitcoin legal tender started…
More bitcoin-back bonds are also planned and Mow said he expected other countries to do the same. He also speculated that the moves would absorb enough bitcoin to push up the value of cryptocurrency. That would allow El Salvador to then pay off the bond with profits made from selling the bitcoin again.
After a five year ‘lock-up’, El Salvador could also start selling some of the bitcoin to give investors an “additional coupon” every year, Mow said…
It is not known when exactly next year the bond would be launched or when El Salvador would buy the $500 million worth of bitcoin it sees as crucial to the plan…
It is also not known what would happen to the new bonds if the country defaulted on its existing traditional bonds. The government’s next bond deadline is an $800 million repayment due in January 2023. That bond is currently trading at a near 20% discount from its face value due to El Salvador’s debt problems…
But no doubt it will attract many find tourists / immigrants, such as this dude:
I’ve always said buying beer was too easy and fast and what I really need is somebody to come along and just fuck the entire thing up https://t.co/rTvQbGGcuZ
— kilgore trout, uatx professor of turnip studies (@KT_So_It_Goes) November 23, 2021
Lots of people making GTA jokes on this but it's the perfect analogy. You win that game by maxing out a device's processing speed and accumulating digital currency that isn't real in the distant hope of one-day owning a rocket launcher-armed Lamborghini.
— zeddy (@Zeddary) November 22, 2021